Barclays smashes a $2.8 billion deal to buy mortgage lender Kensington

Barclays smashes a $2.8 billion deal to buy mortgage lender Kensington

Barclays (BARC.L) has struck a deal worth around 2.3 billion pounds ($2.8 billion) to buy specialist lender Kensington Mortgage Company, extending its reach in Britain’s housing market.

The acquisition represents one of Barclays’ biggest recent transactions and a sizeable bet on the property market.
Kensington is sold by its private equity owners, Blackstone (BX.N) and Sixth Street.

Barclays said on Friday the final price would depend on the size of Kensington’s mortgage portfolio at the time the deal completes, with Barclays estimating it would comprise around 2 billion pounds worth of home loans.

Barclays smashes a $2.8 billion deal

Barclays smashes a $2.8 billion deal

Barclays shares edged up in early trading before dipping 0.5%, broadly in line with the European banking stocks index. (.SX7P)

Barclays has been relatively acquisition-shy recently, although the bank bought a $3.8 billion credit card portfolio co-branded with clothing retailer The Gap (GPS.N) last year.

The lender expects to complete the Kensington deal later this year or early next.

Kensington, which has 600 staff, specializes in providing mortgages to people with complex incomes, such as the self-employed.

Barclays said the deal would be funded from existing resources and reduce its core capital ratio by around 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.

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