You are here: Home - News -

Metro Bank buys up £600m mortgage portfolio from Cerberus

by:
  • 02/06/2017
  • 0
Metro Bank buys up £600m mortgage portfolio from Cerberus
Metro Bank has spent almost £600m on acquiring a package of UK mortgages from US investment firm Cerberus.

The deal, for £596.7m, will see the challenger bank pick up a portfolio that consists of 92% buy-to-let mortgages, with the remainder owner-occupied.

Metro Bank chief executive Craig Donaldson 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 circa 78% (2020 guidance circa 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 deal is being financed using cash from existing resources, with the portfolio acquired at a discount to par, Metro Bank said.

 

Diversified risk

All lending in the loan book is secured on property, which Metro Bank said is “well diversified across the UK” and has a similar credit risk profile to the group’s current mortgage book.

The lender added that the portfolio has a weighted average seasoning of around 10 years and the weighted average loan to value is circa 70%, with a current expected pay rate of 1.6%.

Metro Bank has seen a substantial increase in new mortgage lending over the last year as the bank continues its expansion.

Gross lending grew 12% in Q1 2017 compared to the last three months of 2016, and was up 57% on Q1 2016.

The bank made £4.023bn in total residential mortgage gross lending and advances to customers in the three months to March this year and reached its one millionth customer last month.

In its last trading update in April, the bank saw a 13% increase in deposit growth and underlying pre-tax profits rose from £1.5m to £2m.

International investment vulture funds from Cerberus, Goldman Sachs and Lone Star snapped up mortgage debt, development land and properties in Europe at bargain prices after the credit crunch. The funds provided much-needed capital, particularly for the Irish economy when other investors retreated and UKAR sold Northern Rock’s assets to Cerberus in November 2016.

However, their treatment of customers led the Irish Government to regulate debt purchase more stringently.

Cerberus has attracted consumer complaints in the UK and Ireland caused by heavy-handed debt collection practices and a failure to pass on SVR cuts to Northern Rock borrowers.

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • Jo Wilson from Legal & General Home Finance talks about her Best BDM nomination and her love for the equity release… https://t.co/0tHhv6Lwvc
  • Sponsored content: Four reasons your client wants a product transfer by Halifax Intermediaries… https://t.co/c1k3dj88LO
  • Nationwide trims rates as Accord ups cashback on buy-to-let deals - https://t.co/nbsZh3z49u

Read previous post:
Positive Lending launches Shawbrook’s 55 Plus mortgage

Positive Lending has become the latest distributor to offer Shawbrook’s 55 Plus interest-only mortgage product, launched in March.

Close