Metro Bank UK said it has acquired mortgage loan portfolio of Cerebrus Capital, a U.S. private equity firm.
The GBP596.7 million loan book will be boosting its loan book with primarily buy-to-let mortgages.
Metro Bank said in a regulatory statement that all lending in the Portfolio is secured on property, well diversified across the UK, and has a similar credit risk profile to Metro Bank’s current mortgage book.
The Portfolio consists of approximately 92% buy to let mortgages, with the remainder being owner occupied. The Portfolio has a weighted average seasoning of c.10 years and the weighted average loan to value is c.70%, with a current expected pay rate of c.1.6% principally linked to the Bank of England base rate.
The consideration of £596.7m represents the value at which the acquired mortgages will be taken on to the Bank’s balance sheet and is being financed using cash from existing resources. The Portfolio is being acquired at a discount to par.
Craig Donaldson, CEO, said: “Our lending and deposit growth has gone from strength to strength and the acquisition of this high-quality loan Portfolio supports our high-growth, organic business model as we track ever closer to our 2020 guidance. In particular the acquisition increases the Loan to Deposit ratio to c.78% (2020 guidance c.80%). The Portfolio complements our existing mortgage book and demonstrates our willingness and ability, helped by our strong deposit growth, to take advantage of opportunities as they arise.”
According to the Council of Mortgage Lenders, the UK mortgage market is worth GBP1.3 trillion, representative of 11.1 million mortgages, and is the largest in Europe in terms of amount lent per year and the total value of outstanding loans.