Charter Court and OneSavings Bank merger agreed
The merger of Wolverhampton-based Charter Court Financial Services Group and OneSavings Bank has been agreed.
The £1.6 billion deal would create a leading specialist lender.
Buy-to-let mortgage specialist Charter Court, which has its headquarters at Broadlands, has released its preliminary results for 2018 which showed pre-tax profit up 41.6 per cent from £111.7 million to £158.2m.
Growth met or exceeded all guidance and targets for the year with loan book growth of more than 24 per cent to £6.7 billion
Under the proposed merger deal, OneSavings would acquire all the issued shares of Charter Court with 0.8253 new OneSavings shares exchanged for each Charter Court share.
This will see Charter Court shareholders owning about 45 per cent and OneSavings shareholders holding about 55 per cent of the new combined group, which will be led by current OneSavings boss Andy Golding.
Both Charter Court and One Savings have recommended that their shareholders vote in favour of the deal at their respective investor meetings, with the merger expected to become effective in the third quarter of this year.
OneSavings chairman David Weymouth said the two firms have "demonstrated remarkable growth and returns in the specialist lending market segment over the last decade" and that 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".
"Both businesses bring complementary strengths which we fully expect will position the combined business to continue to deliver for its customers and shareholders.
"The OSB board and management team have built a strong, customer-focused approach that we believe can develop from strength to strength through the combination with Charter Court and continue to grow the businesses within the fragmented specialist lending segment."
Sir Malcolm Williamson, chairman of Charter Court, said: "Since Charter Court's foundation in 2008, the Charter Court management team has achieved a tremendous amount in building Charter Court into one of the UK's leading specialist banks.
"To now be bringing together the complementary strengths of Charter Court and OSB is a great opportunity and excellent base from which to continue a growth strategy."
Sir Malcolm will assume the chairmanship of the new group, while Mr Weymouth will become deputy chairman.
April Talintyre, currently chief financial officer of OneSavings, will retain her position as chief financial officer of the combined group.
Charter Court's chief executive, Ian Lonergan, will become integration director of the new company for up to 18 months to oversee the merger.
OneSavings also posted earnings and revealed that underlying pre-tax profit increased 15 per cent last year to £193.6m as the loan book grew 23 per cent to £9 billion. Statutory pre-tax profit increased to £183.8mn from £167.7m
Charter Court's profits rise reflected a significant increase in net interest income and higher gains on structural asset sales of £36.4m from £17.7m in 2017.
Mr Lonergan said: “In our first full year as a listed company, we again continued to meet or exceed all our guidance and targets as we demonstrated the capability of our specialist lending platform to drive significant growth from the increasing sophistication and professionalisation of demand in our chosen buy to let and specialist residential mortgage markets."
He said the group had introduced new specialist products to meet increasing buy-to-let mortgage demand for multi-unit buildings, holiday rental properties and refurbishment projects.
"Charter Court has a robust pipeline going into 2019 and has made a positive start to the year. In line with our strategy, we remain focused on delivering strong loan book growth, whilst maintaining high levels of efficiency and a low cost of risk," added Mr Lonergan.
Charter Court Financial Services Group, which was formed in 2008, has four buildings on the business park at Broadlands and employs around 600 in Wolverhampton and other offices around the country.