One Savings Bank (OSB) and Charter Court have confirmed they plan to merge in order to create a “leading specialist lender” in a move they hope to complete by quarter three of this year.
The firms emphasised they intend to maintain independent broker distribution platforms, with the various brands – including the likes of Kent Reliance, Prestige Finance and Precise Mortgages – continuing as part of the merged group’s multi-brand strategy.
They argued that the greater scale and resources available as a result of the merger will mean brokers enjoy an “enhanced proposition” with “no disruption to the broker distribution network”.
OSB’s growth in specialist residential mortgages will be accelerated as they will be “leveraging Charter Court’s automation-enabled underwriting and technology platform”, while Charter Court will be looking to expand its buy-to-let offering.
The firms also argue there will be a greater capacity for investment in new products and services as a result of the merger.
David Weymouth, chairman of OSB, said the two firms had demonstrated “remarkable growth and returns in the specialist lending market segment over the last decade”.
“The combination will create a leading specialist lender that we believe will benefit from enhanced scale, product offerings and a robust and diversified funding platform,” he added.
How the merger will work
The proposed merger deal would see OSB pick up all of the issued shares of Charter Court, exchanging 0.8253 new OSB shares for each Charter Court share.
As a result Charter Court shareholders would own around 45 per cent of the new group, with OSB shareholders taking the rest.
Both businesses have recommended that their shareholders vote in favour of the deal, which would see Andy Golding (pictured), currently chief executive at OSB, take on the same role for the combined group.
Gross lending increases
As part of the announcement, each firm published their results for 2019.
OSB revealed that its gross lending jumped from £2.6bn in 2017 to £3bn in 2018, while its net loan book grew by 23 per cent to reach £9bn.
Net interest margins dropped slightly from 3.16 per cent to 3.04 per cent, though the lender said this “remains strong” in the current market.
OSB stated: “Trading conditions in our core buy-to-let market remain highly attractive and application levels for the first quarter to date are very strong.”
Overall OSB posted a profit before tax of £193.6m, up by 15 per cent on the figure from 2017.
Meanwhile gross lending at Charter Court rose by 4 per cent to £2.8bn, taking its total loan book to £6.7bn.
As with OSB, there was a small drop in net interest margins, this time from 3.19 per cent to 3.08 per cent.
Charter’s profit before tax jumped by more than a third to £135m over the year, with the firm describing its performance across 2018 as “robust”.