OSB Group plc (OSBG) has announced the results of its tender offer for its MREL-eligible £300m Senior Holdco 2028 9.5% securities and £400m Senior Holdco 2030 8.875% securities, with valid tenders totalling £634,434,000 — exceeding the original £500m cap. The Group exercised its discretion to purchase all validly tendered securities without scaling, with settlement expected on 16 November 2026. The transaction follows a change in the Bank of England's preferred resolution strategy for the Group to Transfer from 1 January 2026, meaning these securities are no longer required to meet its MREL requirement. Investors will be watching the projected multi-year income benefit against a one-off 2026 charge of approximately £42m.

Key Points

  • OSB Group plc (OSBG) — specialist mortgage lender operating under brands including OSB and Charter Savings Bank
  • OSBG purchased £279,585,000 of 2028 securities at 103.369% and £354,849,000 of 2030 securities at 106.083% of principal amount
  • Transaction expected to reduce 2026 profit before tax by c.£42m via a one-off charge; cumulative income benefit projected at c.£51m through to 2029
  • Investors should watch whether OSBG exercises its right to redeem the 2028 securities at their first call date in September 2027 and 2030 securities in January 2029

Bank of England Resolution Strategy Change Drives OSB Group's Decision to Retire Senior Holdco Securities

From 1 January 2026, the Bank of England's preferred resolution strategy for OSB Group changed to Transfer, which altered the Group's MREL requirement so that it equals only its minimum capital requirements — defined as the sum of Pillar 1 and Pillar 2A. As a direct consequence, the Senior Holdco securities were no longer required to satisfy the Group's current MREL obligations. This regulatory shift provided the strategic rationale for the tender offer, enabling OSBG to remove higher-cost debt from its balance sheet and reduce ongoing coupon payments, with settlement scheduled for 16 November 2026.

OSB Group Purchases £634m of Tendered Securities Above the Original £500m Cap

The tender offer attracted valid tenders totalling £634,434,000 in principal amount, surpassing the initially announced £500m cap. OSBG chose to purchase all validly tendered securities without applying any scaling. Following settlement, £20,415,000 of the 2028 securities and £45,151,000 of the 2030 securities will remain outstanding. The 2028 securities were acquired at 103.369% of principal amount and the 2030 securities at 106.083%, reflecting the above-par purchase prices that contribute to the one-off 2026 charge.

One-Off £42m Charge in 2026 Offset by Projected £28m Total Income Benefit in 2027

The tender offer is expected to reduce OSBG's 2026 profit before tax by approximately £42m through a one-off derecognition charge comprising c.£33m on repurchase including transaction costs, plus c.£9m in hedge accounting adjustments as at 31 October 2026. On a pro-forma basis, the day-one impact is estimated to reduce the Group's first half 2026 CET1 ratio and RoTE ratio by c.20 basis points and c.1.5% respectively. Assuming the repurchased securities are replaced with central bank funding at SONIA plus approximately 20 basis points, total income in 2026 is expected to increase by c.£4m, excluding the one-off charge.

Cumulative Income Benefit of c.£51m Projected Through to 2029 on Illustrative Redemption Assumptions

Beyond 2026, OSBG projects a total income benefit of c.£28m in 2027, assuming the 2028 securities are redeemed at their first call date in September 2027. The benefit from reduced coupon payments, net of hedging, is expected to continue during 2028 and into 2029, assuming the 2030 securities are redeemed at their first call date in January 2029, delivering a cumulative total income benefit of c.£51m over the period. The announcement explicitly states that OSBG retains full discretion over whether to exercise redemption rights on those call dates, and these projections are presented for illustrative purposes only.