Challenger Banks In Advance Talks Over £1.6bn Merger

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    Two of the biggest challenger banks in the United Kingdom are in advanced negotiation over an all-share merger that would create a lender that worth ‎more than £1.6 billion.

    In a report that was published by Sky News, it disclosed that it has discovered that Charter Court Financial Services Group and OneSavings Bank have been holding on-off negotiations about a deal ‎for months.

    Apparently, the negotiations are currently at an advanced stage, with an announcement confirming that the merger is possible within the next fortnight.

    However, one source close that is to the deal said that it could still fall apart.

    Under the proposed terms of the said agreement, OneSavings, which has a market value amounting to just more than £900 million, would use its paper to make an offer for Charter Court, which is valued at approximately £730 million.

    A source said that the deal would be priced based on the prevailing share prices of the two firms during the period leading up to it.

    If ever it is successfully completed, a deal would create a larger player among the cluster of so-called challenger banks in the United Kingdom, many of which were established from the ashes of the financial crisis.

    OneSavings has its origins in the Kent Reliance Building Society and it has been backed by the private equity group JC Flowers. In recent years, it has successfully grown‎ despite the intensifying pressures on the buy-to-let mortgage market.

    The company is run by its chief executive, Andy Golding. It has long been slated to lead an anticipated wave of consolidation in the challenger bank sector.

    Golding is expected to become chief executive of the combined group once its merger with Charter Court goes through.

    Charter Court owns the Exact and Precise mortgage brands and is listed on the London Stock Exchange in ‎2017.

    The activist investor, Elliott Advisors, remain to be its largest shareholder and its view of the Charter Court deal is likely to be significant.

    The new wave of challenger banks have established their loan-books and customer bases steadily, if not spectacularly since many of them were set up after the financial crisis in 2008.

    However, they have persistently protested that the regulatory playing field continues to be stacked against them and in favour of the largest high street banks.

    Some deals have taken place as part of efforts to consolidate the market.