Charter Court Financial and OneSavings confirm £1.6bn merger talks

Charter Court Financial Services and OneSavings Bank have confirmed they are in advanced talks over a possible £1.6 billion merger.

The challenger banks said the combined group would create a “leading specialist mortgage lender in the UK with greater scale and resources to deploy on growth opportunities” and would establish a retail-wholesale funding platform.

Under the proposed deal, OneSavings would acquire all the issued shares of Charter Court with 0.8253 new OneSavings shares exchanged for each Charter Court share.

This would result in OneSavings shareholders holding about 55% and Charter Court shareholders holding about 45% of the combined group, which would be lead by current OneSavings boss Andy Golding.

OneSavings has until April 6 to announce that it intends to make an offer for Charter Court or that it does not intend make an offer. The deadline can be extended on request.

The potential merger comes as consolidation in the challenger banking sector steps up following CYBG’s acquisition of Virgin Money last year and FirstRand’s recent acquisition of Aldermore.

A host of challenger banks have emerged in recent years, such as Monzo and Starling, which are vying to take market share from the big high street banks.

If the OneSavings-Charter Court merger does go ahead it would depend on US activist investor Elliott Advisors, a major shareholder in Charter Court.