The purchase of KMC from companies controlled by funds managed by Blackstone Tactical Opportunities Advisors and funds affiliated with Sixth Street Partners ⁠— will enable Barclays to expand its product offering and potential in the UK mortgage market.

The high-street ⁠⁠bank will also be able to serve more customers and grow mortgage originations to use its UK funding base more effectively.

Alongside acquiring the Maindenhead-based business, which has around 600 employees, Barclays Bank UK has also agreed to procure a portfolio of UK mortgages, mainly those originated by KMC from October 2021 up to completion of the purchase. 

The mortgage portfolio totalled £1.2bn as at 31st May 2022 (made up of approximately 70% owner-occupied and 30% BTL residential mortgages), with a weighted average LTV of 77% at origination.

The transaction is subject to regulatory approval and expected to complete in late Q4 2022 or early next year.

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If completion happens at the beginning of December 2022 and the KMC mortgage portfolio comprises approximately £2bn of loans at that date, Barclays Bank UK is expected to pay around £2.3bn.

The transaction will be financed from Barclays' existing resources and is estimated to reduce its CET1 ratio by circa 12 basis points, presuming completion is in late Q4 2022.

Matt Hammerstein, CEO at Barclays Bank UK, said the transaction underpins the lender’s commitment to the UK residential mortgage market. 

“KMC complements our existing UK mortgage business and broker relationships through the addition of a specialist prime mortgage originator and the utilisation of our strong UK funding base,” he said.

“The transaction should generate attractive returns for Barclays over the medium term as the KMC mortgage portfolio increases in size through the ongoing origination of new mortgages.  

“We look forward to KMC management and employees becoming part of the Barclays group."

As part of the deal, Barclays Bank UK is also purchasing Kensington Mortgage Services Limited.