The UK’s Competition and Markets Authority (CMA) has launched an investigation into OneSavings Bank’s proposed acquisition of specialist mortgage bank Charter Court Financial for £1.6bn.
Image: The CMA is investigating the proposed OneSavings Bank, Charter Court merger. Photo: courtesy of Tony Hisgett from Birmingham, UK/Wikipedia.org.
The competition watchdog, which has initiated a phase 1 investigation, is evaluating if the OneSavings Bank, Charter Court merger will have a significant impact on competition for goods or services within any market or markets in the UK.
The CMA has set a deadline of 30 July 2019 to announce its decision whether the proposed transaction has to be referred for a phase 2 investigation.
It is seeking comments from relevant parties regarding the potential impact the transaction could have, starting from 5 June 2019 to 19 June 2019.
It was in March 2019 when OneSavings Bank agreed to acquire Charter Court in an all-stock deal with an aim to create a major specialist mortgage lender in the UK.
As per the terms of the deal, the specialist lender offered to acquire 100% of the shares of Charter Court by exchanging 0.8253 of its shares for each share of the latter.
OneSavings Bank is mainly focused on select sub-sectors of the mortgage market. The company offers products such as buy-to-let mortgages, commercial mortgages, residential development loans and funding lines.
After completion of the merger, OneSavings Bank’s current shareholders will hold about 55% stake in the combined company while the remaining stake of nearly 45% will be owned by Charter Court.
The merger is expected to help the two firms leverage from their complementary strengths to create a comprehensive and diversified platform across product capabilities, brands, and team cultures.
Charter Court operates through the brands – Charter Savings Bank, Precise Mortgages and Exact Mortgage Experts. Charter Savings Bank is an online bank which offers savings products via its website, while Precise Mortgages provides residential and buy-to-let mortgages and also bridging and second charge loans to borrowers.
On the other hand, Exact Mortgage Experts handles mortgages originated by Precise Mortgages and certain third parties. It also offers portfolio pricing services and credit consultancy to institutional clients.
For the full year 2018, Charter Court registered profit before tax of £158.2m, which is an increase by 40% compared to the previous reported year.