Barclays has agreed to buy specialty lender Kensington Mortgage Company for approximately 2.3 billion pounds ($2.8 billion), expanding its presence in the UK property sector.
The acquisition is one of Barclays' largest recent investments and a significant gamble on the real estate market.
Despite rising inflation, British house prices have continued to grow in recent months, though industry analysts expect they will cool later this year.
Kensington's private equity owners, Blackstone and Sixth Street, are selling the property.
According to Barclays, the final price will be determined by the size of Kensington's mortgage portfolio at the time the purchase closes, which is expected to be approximately 2 billion pounds.
In early trade, Barclays shares rose slightly before falling 0.5 percent, substantially in line with the European banking stocks index.
Barclays has been relatively quiet in terms of acquisitions in recent years, but it did purchase a $3.8 billion credit card portfolio co-branded with clothing retailer The Gap (GPS.N) last year.
The lender intends to close the Kensington transaction later this year or early next year.
Kensington, which employs 600 employees, specialises in offering mortgages to customers with complicated incomes, such as self-employed individuals.
Barclays stated that the transaction will be funded using existing resources and would reduce its core capital ratio by about 12 basis points.
"The transaction reinforces our commitment to the UK residential mortgage market and presents an exciting opportunity to broaden our product range and capabilities," said Matt Hammerstein, CEO of Barclays Bank UK.
(Source:www.economictimes.com)
The acquisition is one of Barclays' largest recent investments and a significant gamble on the real estate market.
Despite rising inflation, British house prices have continued to grow in recent months, though industry analysts expect they will cool later this year.
Kensington's private equity owners, Blackstone and Sixth Street, are selling the property.
According to Barclays, the final price will be determined by the size of Kensington's mortgage portfolio at the time the purchase closes, which is expected to be approximately 2 billion pounds.
In early trade, Barclays shares rose slightly before falling 0.5 percent, substantially in line with the European banking stocks index.
Barclays has been relatively quiet in terms of acquisitions in recent years, but it did purchase a $3.8 billion credit card portfolio co-branded with clothing retailer The Gap (GPS.N) last year.
The lender intends to close the Kensington transaction later this year or early next year.
Kensington, which employs 600 employees, specialises in offering mortgages to customers with complicated incomes, such as self-employed individuals.
Barclays stated that the transaction will be funded using existing resources and would reduce its core capital ratio by about 12 basis points.
"The transaction reinforces our commitment to the UK residential mortgage market and presents an exciting opportunity to broaden our product range and capabilities," said Matt Hammerstein, CEO of Barclays Bank UK.
(Source:www.economictimes.com)
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