Fleet Mortgages has been acquired by Starling Bank in a £50m cash and share deal.

The move is the first acquisition by the bank and means Starling will become the sole funder of future originations for Fleet. The arrangement will also allow the specialist buy-to-let (BTL) lender to secure access to Starling’s growing deposit base.

To date, Fleet has originated £2.3bn of mortgages and experienced zero credit losses. It currently has around £1.75bn of mortgages under management.

The acquisition forms part of Starling’s wider plan to expand lending through a mix of strategic forward-flow arrangements, organic lending and targeted M&A activity.

Fleet CEO, Bob Young, commented: “We are very pleased to be announcing the acquisition of the business by Starling which will deliver a significant benefit to our company, our intermediary partners and their landlord clients, particularly in terms of reduced cost of funds providing us with the ability to deliver highly-competitive products.

“It is certainly exciting times ahead for everyone associated with Fleet and, with new, ambitious shareholders on board, it allows us to potentially move into new product sectors and further grow our market share. This acquisition opens up a range of opportunities that otherwise wouldn’t be available to us.”

Starling CEO, Anne Boden, added: “The acquisition of Fleet is the start of our move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders.

“Fleet’s existing management team will remain in place and Fleet will continue to operate as a stand-alone company, keeping the original name and brand. We’re buying Fleet because it is very good at what it does, not because we want to change it.”

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