Starling Bank buys £500m mortgage book

Starling Bank has been increasingly active in its acquisition strategy in recent years with the takeover of Fleet Mortgages in July last year and a bolder attempt to rival Barclays in the purchase of a £1bn book of mortgages from Kensington Mortgages in November.

Its latest foray into M&A is a £500m acquisition of another mortgage book this time from specialist lender Masthaven, according to a Financial Times report.

Both companies are staying silent on the deal but Starling has been vocal about its plans to buy up rivals in a bid to grow its balance sheet.

It raised £130.5m from its existing investors such as Fidelity Management and Research Company, RPMI Railpen, Qatar Investment Authority and Goldman Sachs to build "war chest" for acquisitions in April despite now running at a profit.

The challenger bank has also previously said that acquisitions were “part of a wider plan to expand lending”.

As one of the biggest lenders during the pandemic through the Bounce Back Loan scheme, a government-guaranteed effort to help cash strapped SMEs, it has quickly built up its loan book. 

However, the bank clearly wants to expand and diversify its lending book and appears to be focusing squarely on mortgages.

Masthaven offers flexible and fixed term savings accounts, bridging loans, development finance and mortgages since 2004. Launched as a retail Bank in 2016,  it was known previously as Masthaven Finance. 

Starling Bank declined to comment for this story.