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NatWest Group plc (LSE:NWG) has announced a strategic acquisition of a £2.5 billion portfolio of prime UK residential mortgages from Metro Bank plc. This deal marks a significant expansion of NatWest Group’s mortgage business, aligning with its growth strategy and recent acquisitions.
The mortgage portfolio, which has a weighted average current loan-to-value (LTV) ratio of approximately 62%, will add around 10,000 customer accounts to NatWest Group’s books. Post-acquisition, these accounts will continue to be serviced by Metro Bank as per existing arrangements until the transition is fully completed.
Paul Thwaite, CEO of NatWest Group, highlighted the strategic importance of this acquisition. “Following today’s announcement, we are acquiring £2.5 billion of prime residential mortgages from Metro Bank and, as a result, look forward to welcoming around 10,000 customers to NatWest Group,” Thwaite stated. He emphasized that this transaction represents an opportunity to accelerate the growth of NatWest’s retail mortgage book within its risk appetite and to achieve attractive returns.
Thwaite also noted that this acquisition aligns with NatWest Group’s strategic priorities and builds on the momentum of its recent acquisition from Sainsbury’s Bank. “We are focused on a smooth transition and have a strong track record of successful integration with Metro Bank, following our previous acquisition of mortgages in 2020,” he added. This comment underscores NatWest’s confidence in managing and integrating the new portfolio effectively, leveraging its experience from past transactions.
Upon completion of the transaction, NatWest Group anticipates a minimal impact on its financial metrics. The acquisition is expected to reduce NatWest Group’s Common Equity Tier 1 (CET1) ratio by less than 10 basis points, based on the CET1 ratio as of June 30, 2024. This indicates that while the transaction will contribute to the growth of NatWest’s mortgage portfolio, it will have a limited impact on the group’s capital adequacy.
The acquisition of this mortgage portfolio is part of NatWest Group’s broader strategy to strengthen its position in the UK residential mortgage market. By acquiring a substantial portfolio of prime residential mortgages, NatWest Group aims to enhance its market share and capitalize on the stable returns offered by high-quality mortgage assets.
This move follows NatWest Group’s recent efforts to expand its retail banking footprint, including the notable acquisition of a mortgage portfolio from Sainsbury’s Bank. Such transactions are designed to bolster NatWest Group’s retail banking operations and improve its competitive position in the UK financial services sector.
As NatWest Group proceeds with this acquisition, the focus will be on ensuring a seamless transition for the 10,000 customer accounts involved. The experience gained from previous integrations will likely be beneficial in managing this transition effectively.
Overall, the acquisition of Metro Bank’s mortgage portfolio represents a strategic enhancement for NatWest Group, aligning with its growth objectives and strengthening its presence in the UK residential mortgage market.
