Two of the biggest specialist lenders are in advanced talks about a possible merger which would create a business completing around £4bn of mortgage lending a year.
In a statement issued to the stock market this morning, Charter Court Financial Services and One Savings Bank confirmed they were in discussions about a merger.
The news pushed OSB share price up from 369p at the close on Friday to 405p on Monday lunchtime, with a similar rise for Charter Court's from 306p to 335p.
Charter Court is the parent company of Precise Mortgages, Exact Mortgage Experts and Charter Savings Bank.
One Savings Bank (OSB) is the parent company of Kent Reliance, Interbay Commercial and Prestige Finance, among others.
According to the most recent figures available from UK Finance, in 2017 Precise completed £2.4bn of mortgage lending, with OSB completing £1.5bn.
However, interim results published through the first three quarters of 2018 suggest the lenders are continuing to grow their volumes.
Under the proposed merger OSB would acquire all the issued and to be issued ordinary share capital of Charter Court on the basis of an exchange ratio of 0.8253 new OSB shares for each Charter Court share.
This would leave OSB shareholders owning approximately 55 per cent and Charter Court shareholders owning around 45 per cent of the combined group.
It is proposed that Andy Golding, currently CEO of OSB, would become CEO of the combined group.
maintain operational centres of excellence to drive service levels and platform efficiency.
Under mergers and acquisition rules, OSB is required to make a confirmed offer for Charter Court by 5.00 pm on 6 April.
However, he noted operating costs would likely provide the biggest area of savings and increased profitability.