Shawbrook urges investors to sit tight after an £825m takeover offer

Emma Haslett
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Housing Market Begins To Slow In UK
The lender said its over-55 mortgage product was picking up steam (Source: Getty)

Challenger bank Shawbrook has urged its investors to sit tight while it staves off an unwelcome takeover bid.

Shares in the bank edged 0.9 per cent lower to 339p in mid-morning trading, after it issued a circular saying its board could not recommend an £825m takeover offer made last month by a consortium of private equity bidders including Pollen Street Capital and BC Partners, and urged shareholders to take no action.

The plea came as an interim management statement showed the costs associated with fighting off the bid will hit £4m if it is unsuccessful, and £9m to £12.5m if it is a success.

The company said it expected group originations to rise four per cent to £495m in the first quarter of 2017, with a 12 per cent jump in buy to let originations - despite last year's stamp duty-induced buy to let frenzy.

Meanwhile, loans increased three per cent to £4.2bn, while it said its interest-only mortgage for customers aged 55 and over was beginning to gain in popularity, with more than 75 enquiries.

"Our [first quarter] 2017 performance reflects the resilience inherent in our diverse business," said Steve Pateman, the lender's chief executive.

"We can continue to grow within our risk and return disciplines notwithstanding a significant contraction in flows in the buy to let market, and whilst market risk and return dynamics are competitive, we believe we can continue to grow prudently and in line with our upper quartile return on tangible equity ambitions generating significant value for our shareholders over and above that implied in the current offer."

Read more: Shawbrook becomes the latest challenger to be unshaken by Brexit

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