This is the first acquisition by the bank and means Starling will become the sole funder of future originations for Fleet Mortgages.
Fleet Mortgages will gain access to Starling’s deposit customer base through the deal.
The specialist lender has originated £2.3bn of mortgages to date and has reported no credit losses. It currently has £1.75bn mortgages on its loan book.
Fleet’s management team will still run the lender and daily operations remain unchanged.
The deal marks Starling’s entrance into the mortgage market. The deal is also part of the challenger bank’s plan to expand its lending through mergers and acquisitions and forward-flow arrangements, where it will purchase loans originated by other providers.
Bob Young, chief executive at Fleet Mortgages, said: “We are very pleased to be announcing the acquisition of the business by Starling Bank which will deliver a significant benefit to our company, our intermediary partners and their landlord clients, particularly in terms of reduced cost of funds providing us with the ability to deliver highly-competitive products.
“It is certainly exciting times ahead for everyone associated with Fleet and, with new, ambitious shareholders on board, it allows us to potentially move into new product sectors and further grow our market share. This acquisition opens up a range of opportunities that otherwise wouldn’t be available to us.”
Young added: “This is a natural progression for our lending business, with both Starling and Fleet sharing a very similar cultural fit and provides us with a very strong lending base from which to work from and to deliver for our staff, our adviser partners and our landlord customers.”
Anne Boden, CEO of Starling Bank, said: “The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders.
“Fleet’s existing management team will remain in place and Fleet will continue to operate as a stand-alone company, keeping the original name and brand. We’re buying Fleet because it is very good at what it does, not because we want to change it.”
Starling Bank was advised by Rothschild and PwC as its financial adviser and TLT as legal counsel. Fleet Mortgages enlisted West Hill Corporate Finance as financial adviser and Humphries Kirk as its legal adviser.