LHV UK has acquired the small and medium-sized enterprise (SME) lending business of Bank North in a deal valued at £19.7m.
The SME business consists of a loan portfolio of around £17.9m, 20 employees, an IT system for customer relations and loan portfolio management and agreements with commercial brokers.
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The deal marks LHV UK’s entry into the SME lending market and is expected to generate interest income from the acquired loan book immediately.
LHV UK, a subsidiary of Estonian financial services provider LHV Group, is in the process of applying for a banking licence in the UK.
Last week, LHV, which also holds a 9.3% stake in Bank North as a financial investment, announced its intention to buy Bank North’s SME lending business.
At the time, LHV UK CEO Erki Kilu said: The demand for SME lending is well proven, and this acquisition enables LHV UK to accelerate our plans to expand to servicing SME companies.
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By GlobalData“The SME lending business will remain regional through our offices in London and Manchester, where it will continue to benefit from local expertise and established relationships with the brokers, who have already delivered a proven substantial loan pipeline to Bank North.”
The sale of the SME lending business by Bank North comes after its decision to wind down operations due to a lack of funds.
Bank North will use the proceeds from the sale to settle creditors as part of its solvent wind-down process.
