One Savings Bank and Charter Court announce terms of £1.6bn merger

Jessica Clark
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General Election - Economy
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Challenger banks One Savings Bank and Charter Court have confirmed the terms of a £1.6bn merger.

Following the completion of the deal One Savings Bank shareholders will own around 55 per cent of the combined company, the firm announced as it posted its full-year results for 2018.

Read more: One Savings Bank and Charter Court shares soar after merger talks confirmed

One Savings Bank chief executive Andy Golding and chief financial officer April Talintyre will retain their roles in the merged group, while Charter Court chief executive Ian Lonergan will be moved over to an integration director role for 18 months.

Sebastian Maloney, currently the chief financial officer of Charter Court, will be retained as an advisor for up to a year.

Both banks’ directors and activist investor Elliott Management, the largest shareholder in Charter Court, have said they will back the deal.

One Savings Bank were advised on the deal by Rothschild & Co and Barclays. Eversheds Sutherland provided legal advice to Charter Court's management team.

The figures

One Savings Bank reported increased profits of £183.8m this morning, up from £167.7m in 2017.

Net interest income was £287.3m, up from £245.4m the previous year, while net losses on financial instruments shrank from £6.3m to £5.2m.

Earnings per share were up from 51.1p to 55.5p in 2018 and the bank announced full-year dividend of 14.6p per share.

The company’s loan book grew 23 per cent to £9bn from £7.3bn driven by 15 per cent growth in gross originations and return on equity was 26 per cent.

Why it’s interesting

The bank said the strongest lending growth was achieved in its buy-to-let and small to medium business segment, which caters for large professional landlords and accounted for 82 per cent of the total net loan book.

It reported an exceptional cost of £9.8m last year as the bank bought out its joint venture partners in its Heritable Development Finance business.

What One Savings Bank said

Chief executive Andy Golding said: “Following the statement released on 9 March 2019 confirming that Charter Court Financial Services and One Savings Bank were in advanced discussions regarding a possible all-share combination of the two companies, we are today pleased to announce the recommended all-share combination of the two organisations.

“As such, we are not able to provide our usual detailed guidance for the financial year ahead.

“One Savings Bank entered 2019 with a strong pipeline and our core markets remain highly attractive.

“The strength of our lending franchise, driven by specialist underwriting, gives us confidence in continuing to deliver sustainable growth in our net loan book.

“Despite the uncertainty surrounding Brexit, based on application levels seen so far this year, we would expect to deliver mid-teens net loan book growth in 2019 at attractive margins, with NIM marginally lower than 2018, reflecting current asset pricing and the continued transition from back book to front.

Read more: Challenger banks confirm £1.6bn merger talks

“Whilst we will continue to invest in the business for growth in 2019, as always, we will maintain a strong focus on cost efficiency and control as reflected in our cost to income and management expense ratios.

“One Savings Bank is exceptionally well placed to continue to generate attractive returns for our shareholders regardless of potential political scenarios that may take place and we look to the future with confidence.”