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OneSavings Bank and Charter Court Financial Services agree merger and post 2018 profit growth

The challenger banks confirmed the merger alongside their results for the 2018 financial year
The banks believe the deal has a “strong strategic rationale”

OneSavings Bank PLC (LON:OSB) and Charter Court Financial Services Group PLC (LON:CCFS) have agreed on terms for an all-share £1.6bn merger.

Under the deal, OSB will pay 0.8253 new shares for each Charter Court share, giving it a 55% stake in the combined company. Charter Court shareholders will own the rest.

READ: OneSavings Bank and Charter Court Financial Services confirm £1.6bn merger talks

The challenger banks revealed on Monday that they were in advanced talks about a possible merger.

Strategic rationale

In a joint statement on Thursday, the banks repeated that they believe the deal has a “strong strategic rationale” and would create a “specialist lender in the UK with greater scale and resources to deploy on growth opportunities”.

OSB chief executive Andy Golding would become the boss of the merged company and Charter Court chairman Malcolm Williamson will take the same role at the enlarged group.

Alongside the announcement, the banks both released their 2018 full year results.

OSB said underlying pre-tax profit gained 15% to £193.6mln last year as the loan book rose 23% to £9bn.

However, the net interest margin (NIM) – the difference between interest earned and the amount paid out on deposits – fell to 3.04% from 3.16% last year amid a tough mortgages market.

Charter Court reported a 41.6% increase in pre-tax profit to £158.2mln last year and a 24% rise in the loan book to £6.7bn while its NIM dropped to 3.08% from 3.19%.

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