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June 27, 2022

Barclays signs deal to buy specialist mortgage lender Kensington for £2.3bn

British banking group Barclays has agreed to acquire Kensington Mortgage in a deal for a total consideration of around £2.3bn.

The lender will buy the specialist mortgage firm from companies controlled by funds managed by Blackstone Tactical Opportunities Advisors and funds affiliated with Sixth Street Partners.

The deal includes Kensington Mortgage Company (KMC) and Kensington Mortgage Services (KMS). Barclays will also acquire a portfolio that would primarily include mortgages originated by KMC from October 2021 to completion of the deal.

Kensington is a specialist residential mortgage lender, which offers services to customers with complex incomes via intermediaries.

The firm leverages proprietary technology, data analytics and insight to design mortgage offerings and make credit decisions with a focus on the self-employed and customers with multiple or variable income sources. 

The Maidenhead-based entity has around 600 employees.

The deal is anticipated to bolster Barclays’ position in the UK mortgage space, expand its product portfolio and increase its customer base.

KMC is said to have originated around £1.9bn of mortgages in the year that ended on 31 March 2022.

Barclays Bank UK CEO Matt Hammerstein said: “KMC 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.

“KMC 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.  The Transaction should generate attractive returns for Barclays over the medium term as the KMC Mortgage Portfolio increases in size through the ongoing origination of new mortgages.”

Kensington Mortgages Mark Arnold CEO said: “We have a strong track-record in the specialist mortgage space, using our proprietary data and tech platform to innovate and grow, and now is a natural point to bring in a partner who can help us to drive our next expansion phase.”

The deal is expected to close in late Q4 2022 or early Q1 2023, subject to regulatory approval.

Last month, Barclays revealed that it will close additional 27 branches as digital banking gains traction.

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