Specialist OneSavings Bank to float on LSE

The bank’s chief executive said OneSavings would float with an expected value of £500m to £600m to enable it “to invest for future growth”.

The private equity-backed lender’s specialist segments include residential mortgages and buy-to-lets/SMEs. Almost all its organic lending comes through specialist intermediaries and is predominantly funded by retail savings.

Ian Gordon, securities analyst for Investec, said: “Generally, the environment for challenger banks appears increasingly attractive. Although mortgage stock balances have been relatively static, gross mortgage lending has been recovering strongly – up 21 per cent in 2013, with a similar level of growth likely in 2014.

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“Moreover, challenger banks have collectively been taking an increasing share of this expanding market – in effect mopping up the share, (in part) deliberately foregone by the six main incumbent lenders.

“The savings market has also become considerably easier with incumbent banks competing much less aggressively, thereby reducing incremental funding costs for expanding challenger banks. Ex-legacy issues and UK retail banking now offer highly profitable opportunities.”

Adviser view

Daniel Bailey, mortgage broker at the Derbyshire-based Middleton Finance, said: “This is an interesting development as floating means the bank will be answerable to shareholders, who will want to see growth and potentially a dividend.”