NatWest Group plc (LON:NWG) has announced that it has entered into an agreement with Metro Bank plc to acquire a £3.0 billion portfolio of prime UK mortgages. The portfolio consists of owner occupied residential mortgages with a weighted average current loan to value of c.60%.
As part of the transaction, NatWest will welcome over 13,000 customers who will continue to be serviced by Metro Bank, in accordance with current arrangements, following the transfer to NatWest.
The purchase price of c.£3.1 billion represents a 2.7 per cent premium on gross book value1. The impact of the transaction, based on NatWest’s CET1 ratio at 30 September 2020, equates to a reduction of around 15 basis points2.
Commenting on the transaction, Alison Rose, CEO of NatWest said,
“Growing our mortgage book is an important strategic priority as we build a bank that delivers sustainable returns for shareholders. The addition of this loan book will supplement the strong organic growth that we continue to achieve.
“Our strong capital position, well above the target range, continues to provide the flexibility to navigate the uncertain environment and support our customers during the challenging times ahead.”
1. There may be an adjustment to the financial impact and consideration paid at completion under which loans representing up to 10% by value of the portfolio may be excluded from the sale, equal to a potential reduction in price of c.£0.3 billion. NatWest has full economic benefit of the portfolio and the transaction will be reflected in Q4 2020 results. The transaction is expected to close during the first quarter of 2021.
2. NatWest Group reported a Common Equity Tier 1 (CET1) ratio of 18.2% at 30 September 2020.
