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LONDON (Alliance News) - FTSE 250-listed peers OneSavings Bank PLC and Charter Court Financial Services Group PLC confirmed Thursday they have agreed to the terms of an all-share merger.
The midcap lenders also both reported a rise in annual profit and loan books on Thursday.
The agreement, with OneSavings offering 0.8253 of a share for each Charter Court share, is the same as that first announced at the start of the week. Under the deal, Charter Court shareholders will own 45% of the group and OneSavings the rest. The combined market capitalisation of the two banks is GBP1.78 billion.
The two firms believe the merger has "strong strategic rationale".
The new combined company will be chaired by current Charter Court Chair Malcolm Williamson, with OneSaving Bank Chair David Weymouth becoming deputy chair. Current OneSavings Bank Chief Executive Andy Golding and Chief Financial Officer April Talintyre will retain their positions in the combined group.
Charter Court CEO Ian Lonergan will move to an integration director role in the combined group for a period of 18 months to facilitate Charter Court's integration within the merger. Charter Court CFO Sebastien Maloney will be retained as an adviser for 12 months.
Going forward, the new combined group expects to distribute 25% of underlying pretax profit to shareholders, consistent with the current dividend policies of OneSavings Bank and Charter Court.
Turning to results for 2018, OneSavings Bank reported a 9.6% rise in pretax profit to GBP183.8 million from GBP167.7 million in 2017. The lender's net interest income jumped 17% to GBP287.3 million from GP245.4 million.
OneSavings Bank's loan book increased 23% to GBP9.0 billion, with originations growing 15% to GBP3.0 billion. The lender's core buy-to-let lending increased 20% to GBP6.52 billion.
OneSavings Bank's net interest margin ended 2018 at 3.04%, down from 3.16% the year before.
OneSavings Bank ended 2018 with a CET1 ratio of 13.3%, compared to 13.7% the year before, but saw a 26% increase in risk-weighted assets to GBP4.21 billion.
OneSavings Bank upped its total dividend for 2018 by 14% to 14.6p from the 12.8p distributed in 2017.
Charter Court reported a 42% rise in pretax profit for 2018 to GBP158.2 million from GBP111.7 million in 2017. The lender's net interest income increased 25% to GBP180.5 million from GBP144.1 million in 2017.
The company's loan book increased 24% to GBP6.7 billion, with originations increasing 3.7% to GBP2.8 billion. Charter Court's core buy-to-let lending increased 40% to GBP4.5 billion.
Charter Court ended 2018 with a net interest margin of 3.08% compared to 3.19% at the end of 2017.
Charter Court's CET1 ratio ended 2018 marginally higher at 15.7% as the lender's risk-weighted assets increased 27% to GBP2.70 billion.
The lender declared a final dividend of 9.9p, giving an inaugural total dividend of 12.7p per share - which is 10% above the company's IPO target.
Shares in OneSaving Bank were up 2.0% Thursday morning at 405.00 pence each, with Charter Court Financial up 1.8% at 330.80p.
