Acquisition allows bank to become one of the few major banks with a specialist mortgage offering
UK banking giant Barclays has completed the acquisition of specialist mortgage lender Kensington Mortgages, following regulatory approval.
Kensington announced the completion of its sale on Wednesday, saying that Barclays has acquired the business from companies controlled by funds managed by Blackstone Tactical Opportunities and funds affiliated with Sixth Street, which jointly owned the specialist lender since 2015.
Maidenhead-based Kensington has around 600 employees and originated approximately £1.9 billion of mortgages, including retentions, over the year to March 31, 2022.
As part of the acquisition, all of Kensington’s employees will become part of the wider Barclays Group, with Kensington continuing its day-to-day business operations as usual and retaining the brand as a largely standalone business. It, however, stands to benefit from the financial strength, deposit funding base, and operational reach of the banking giant.
The acquisition, which was first reported last year, allows Barclays to become one of the few major banks with a specialist mortgage offering.
“Today marks the start of an exciting new chapter of growth for Kensington,” Mark Arnold, chief executive at Kensington Mortgages, stated in a post announcing the news. “We have a strong track record in the specialist mortgage space, using our proprietary technology, data analytics, and human insights to design innovative products and make lending decisions to serve our customer base - the self-employed and those with multiple or variable incomes.
“As a major UK bank with a broad reach and offering, Barclays is well-placed to support our expansion. We look forward to working with them closely to bring our propositions to a wider range of individuals across the UK. And as we enter this new chapter, we would like to thank Blackstone and Sixth Street for all their support and investment over the last eight years.”
Matt Hammerstein, chief executive at Barclays Bank UK, added that the transaction reinforces their commitment to the UK residential mortgage market and presents an exciting opportunity to broaden their product range and capabilities.
“Kensington is a best-in-class specialist mortgage lender with an established track record in the UK market, strong broker and customer relationships and data analytics capabilities,” Hammerstein said. “Kensington complements our existing UK mortgage business and broker relationships through the addition of a specialist prime mortgage originator and the utilisation of our strong UK funding base. We look forward to KMC management and employees becoming part of the Barclays group.”
Barclays’ acquisition of a specialist lender – brokers react
Riz Malik, director at R3 Mortgages, said Kensington’s sale to Barclays “is fantastic news for the mortgage market as Barclays spices up its lending game with some specialist flavours, not just vanilla.”
“Kensington will now be able to access new funding opportunities while maintaining its brand independence as a specialist lender in a growing market,” Malik pointed out. “Barclays can also benefit from Kensington’s streamlined process and use of technology. This could be the beginning of more high street lenders diversifying into specialist lending where profit margins are greater.”
Rhys Schofield, managing director at Peak Mortgages and Protection, was likewise thrilled with the news.
“Not every client fits a high street lender shaped box, and Kensington specialise in more real-life type lending scenarios,” Schofield said. “It’s really exciting to see what they can do with the financial backing of a major bank.”
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, however, hopes that Kensington’s systems, know-how and service standards “rub off on Barclays and not the other way around.”
“Kensington will be a good fit within the Barclays empire,” he remarked. “With little overlap between markets, it gives Barclays access to instant growth and market share without competing with itself, or exposing the Barclays brand to higher risk business.
“The knowledge and skills at Kensington in terms of specialist underwriting could be a real win, too. Kensington, in turn, gets access to a funding line that will allow them to expand and challenge in the specialist mortgage market like never before. It will be interesting to see how well the two work together in the coming months and years, as well as seeing if any other big brand high street players make moves on any of the other specialist lenders.”
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