Bulletin: NatWest Modestly Expands Its Mortgage Business With A Small Portfolio Acquisition

LONDON (S&P Global Ratings) Dec. 21, 2020--S&P Global Ratings views NatWest Group plc's agreed acquisition of a £3.0 billion U.K. residential mortgage portfolio from Metro Bank plc (not rated) as a modest, bolt-on acquisition. The transaction supplements NatWest's strong organic growth in the mortgage market and absorbs a very small part of its surplus regulatory capital. The transaction is minor in the context of NatWest retail banking division's £157 billion U.K. mortgages and 10.6% stock market share as of Sept. 30, 2020. The risk profile of the Metro Bank portfolio appears similar to that of NatWest's existing assets. For example, the acquired loans are to owner-occupiers and the average indexed loan-to-value ratio is about 60%, which is similar to the

...December 21, 2020 LONDON (S&P Global Ratings) Dec. 21, 2020--S&P Global Ratings views NatWest Group plc's agreed acquisition of a ú3.0 billion U.K. residential mortgage portfolio from Metro Bank plc (not rated) as a modest, bolt-on acquisition. The transaction supplements NatWest's strong organic growth in the mortgage market and absorbs a very small part of its surplus regulatory capital. The transaction is minor in the context of NatWest retail banking division's ú157 billion U.K. mortgages and 10.6% stock market share as of Sept. 30, 2020. The risk profile of the Metro Bank portfolio appears similar to that of NatWest's existing assets. For example, the acquired loans are to owner-occupiers and the average indexed loan-to-value ratio is about 60%, which is similar to the 57% ratio for NatWest's current book on June 30, 2020. NatWest will pay a 2.7% premium on gross book value, subject to any final adjustments. It expects a 15 basis point reduction in its Common Equity Tier 1 ratio, which,...

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