Challenger bank Metro Bank plc has announced it has completed the acquisition of a portfolio of majority buy-to-let mortgages from Cerberus European Residential Holdings B.V.
The deal, which sees Metro acquire the entire portfolio for £596.7m, has been funded through existing cash reserves and has been sealed at a ‘discount to par’ according to the bank.
Consisting of around 92% buy to let mortgages with the rest owner occupied, Metro claims that the portfolio is well diversified across the UK, thus leaving it less exposed to fluctuations in local markets, and had a similar credit risk profile to its current mortgage book.
Chief Executive Officer, Craig Donaldson, described the portfolio as ‘high-quality’ and one that would support its growth targets up to 2020.
He commented: “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.”
The acquisition comes after a strong 12 months for the publicly-listed bank after revealing strong deposits and lending growth in 2016. Metro is now hoping to turn profitable later this year and recently surpassed one million customer account openings.
Written by: Billy Wood
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