Barclays has agreed to buy British specialist lender Kensington Mortgages from private equity firms Blackstone and Sixth Street, to expand its presence in the mortgage market.
The UK bank will also acquire Kensington’s £1.2 billion home loan portfolio as part of the deal.
Barclays said it expected to pay around £2.3billion, assuming the deal was completed in December and Kensington’s mortgage portfolio included £2billion in loans at that time -the.
The sale followed an auction process that attracted interest from a range of bidders, including Starling Bank, according to people familiar with the situation.
The move comes amid fierce competition in the UK mortgage market and rising interest rates, which have boosted lenders’ income.
Kensington, which is based in Maidenhead, is a specialist mortgage lender focusing on providing residential property loans through brokers to those who might find it difficult to borrow from high street banks, such as the self-employed .
The lender was owned by Investec until 2014 when it was sold to private equity.
Matt Hammerstein, chief executive of Barclays Bank UK, said the deal “reinforces” its commitment to the UK residential mortgage market and “presents an exciting opportunity to expand our product range and capabilities”.
About 70% of Kensington’s mortgage portfolio is owner-occupied, while 30% is buy-to-let. The portfolio has an average loan-to-value ratio of 77%.
Barclays said it expected the deal to be finalized in the fourth quarter of this year and would cut its core capital ratio, a measure of financial strength, by around 12 basis points. .