Barclays Bank has bought Kensington Mortgages for £2.3bn following an auction by the specialist mortgage lender.
Kensington, which has 600 employees and specializes in offering mortgages to the self-employed and borrowers with more complex incomes, is being sold by private equity owners Blackstone and Sixth Street. It originated around £1.9billion in mortgages in the year to March 31, 2022.
The acquisition means Barclays is one of the few big banks to offer more specialist lending solutions. It is also one of Barclays’ largest recent acquisitions, and an indication that sees continued growth in the UK housing market.
The deal, which was announced this morning, is subject to regulatory approval and is expected to be finalized later this year. Barclays said the final price would depend on the size of Kensington’s mortgage portfolio at the time of the deal.
It is understood that Kensington’s proposed sale has attracted potential buyers from across the mortgage industry, with the sale price offered by Barclays being significantly higher than previous estimates.
Kensington Mortgages Managing Director Mark Arnold said: “We have a strong track record in the specialist mortgage space, using our proprietary data and technology platform to innovate and grow, and it is now a natural point to bring in a partner who can help drive our next phase of expansion.
He adds that as a major UK bank, Barclays is well placed to support this expansion, while the sale will allow it to differentiate itself as a “consumer specialist” offering a range of mortgage solutions not available from competitors.
Barclays Bank UK chief executive Matt Hammerstein said the transaction strengthened the bank’s commitment to the UK residential mortgage market and presented an opportunity to expand its product range and capabilities.
He adds: “Kensington Mortgage Company is a leading specialist mortgage lender with established experience in the UK market, strong broker and client relationships and data analysis capabilities.
“This complements our existing UK mortgage business and broker relationships through the addition of a specialist prime mortgage originator and the use of our strong UK funding base.”