Barclays has agreed to buy UK specialist lender Kensington Mortgages from private equity firms Blackstone and Sixth Street, to expand its presence in the mortgage market.
The UK bank will also acquire Kensington’s £1.2bn home loan book as part of the transaction.
Barclays said it expected to pay about £2.3bn, on the premise that the deal was completed by December and Kensington’s mortgage book comprised £2bn of loans by that point.
The sale followed an auction process that attracted interest from a range of bidders, which included Starling Bank, according to people familiar with the situation.
The move comes amid fierce competition in the UK mortgage market and as interest rates rise, providing a boost to lenders’ income.
Kensington, which is based in Maidenhead, is a specialist mortgage lender that focuses on providing residential home loans through brokers to those who might struggle to borrow from the large high street banks, such as the self-employed.
The lender was owned by Investec until 2014, at which point it was sold to private equity.
Matt Hammerstein, chief executive of Barclays Bank UK, said the deal “reinforces” its commitment to the UK residential mortgage market and “presents an exciting opportunity to broaden our product range and capabilities”.
About 70 per cent of Kensington’s mortgage book is owner-occupied, while 30 per cent is buy-to-let. The portfolio has an average loan-to-value of 77 per cent.
Barclays said it expected the deal to be finalised in the fourth quarter of this year and that it would reduce its common equity tier one ratio, a measure of financial strength, by about 12 basis points.