View the article online at http://citywire.co.uk/money/article/a639334
Small bank could be big deal for buy-to-let lender Paragon
Paragon Group, the buy-to-let lender cashing in on the decline in house ownership, is in talks to buy Hampshire Trust.
Paragon Group (PARA.L), the buy-to-let lender cashing in on the decline in house ownership, is poised to become Britain's newest bank.
Responding to a story in the Sunday Times the company today confirmed it was considering buying Hampshire Trust, a small private bank owned by National Counties building society.
The acquisition would give Paragon a banking licence which it could use to offer savings accounts to its customers. As well as broadening its product range it would also give Paragon another source of funding for its mortgages.
Paragon mostly relies on wholesale markets for its mortgage funding. It was hit hard in the financial crisis but survived the credit crunch after raising money from shareholders in an emergency rights issue four years ago.
The news lifted Paragon shares nearly 2p to just over 242p. The shares have jumped 33% this year but are still well below their peak six years ago.
The shares are held by Jamie Hooper, manager of the AXA Framlington UK Growth fund, who recently told us he thought Paragon was riding a 'fantastic trend' in buy to let as people had to rent for longer before buying their own homes.
Last month Paragon reported full-year pre-tax profits had jumped 16% to £94.2 million. Chief executive Nigel Terrington said it had been able to grow through buying blocks of mortgages from the big banks that needed to scale down their borrowings.
News sponsored by:
Making the most out of Europe's potential means seeing things differently. Learn more about how BlackRock's focused approach to investing in Europe helps investors unlock the continent's vast potential.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the shares
More from us
Tools from Citywire Money
From the Forums+ Start a new discussion
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.