Metro Bank Plc completed the acquisition of a portfolio of U.K. mortgages from Cerberus European Residential Holdings BV for a consideration of £596.7 million.
The portfolio, which is being acquired at a discount to par, consists of about 92% buy-to-let mortgages, with the remainder being owner-occupied. The portfolio has a weighted average seasoning of about 10 years, weighted average loan-to-value of 70% and a current expected pay rate of 1.6%, primarily linked to the Bank of England base rate.
Metro Bank noted that all lending in the portfolio is secured on property and has a similar credit risk to the lender's current mortgage book. The consideration, which is being financed from the bank's existing resources, represents the value at which the acquired mortgages will be taken on to Metro Bank's balance sheet, the lender said June 2.
Metro Bank CEO Craig Donaldson said the transaction increases the bank's loan-to-deposit ratio to approximately 78%. The bank expects its loan-to-deposit ratio to reach about 80% in 2020.