The lender today announced it will be withdrawing from the UK banking market over the next two years.

It will reduce and ultimately sell its long-term and short-term loan books and return all savings deposits to customers by the end of 2023.

Masthaven said it is “well-funded” and has “sufficient capital and liquidity to repay savings customers”, but added that the decision to close was taken due to insufficient investment.

It launched in 2004 as a non-bank lender and gained a banking licence in 2016 to offer saving deposit accounts and mortgages.

Masthaven said it has around 19,000 savings customers with a total of £790m on deposit, and its mortgage book consists of around 3,500 loans with a total value of £500m.

If you’re a savings or mortgage customer, here’s what you need to know…

Masthaven savings customers

It said customer savings are safe and continue to be protected by the Financial Services Compensation Scheme (FSCS).

Customers don’t need to take any action and accounts can still be operated as normal. However, the terms and conditions of the accounts remain, so if you have a fixed term account, you won’t be able to withdraw funds. For those with an eSaver, money can be accessed.

Masthaven said it will return all savings over the next two years, either on or before maturity. But if your fixed term account is due to mature in 2023 or after, it will be in touch to explain what will happen. Savings will continue to earn interest.

Meanwhile, it will reduce its range of fixed-term deposit products as part of the wind-down process, offering a maximum term of six months to new or existing deposits.

Masthaven mortgage customers

It said customers don’t need to take any action and as the terms of the mortgage remain the same, payments will continue to be taken as normal.

Once the mortgage book is sold, customers won’t need to re-apply for their mortgage and payments and interest rates won’t change.

If you’ve just applied to switch to Masthaven, it will continue to process the application. For those who are remortgaging elsewhere, Masthaven added it will continue to process all redemption requests as normal.

It will stop accepting new loan applications this week and added that it will sell the mortgage book through a “competitive tender process” which is expected to complete during 2022.

For bridging and development loan customers, Masthaven said it will allow the short-term lending book to run-off naturally as loans are repaid. It will then consider the sale of the remaining book once a buyer is secured for the mortgage book.

‘Shock and disappointment’

Leigh Bartlett, chief executive of Masthaven Bank, said: “We have conducted a comprehensive strategic review of the business, with the support of specialist advisers, to consider how we could achieve our ambitions to grow the bank.

“We assessed a range of options, but all of them required a significant commitment of long-term capital and we have not been able to secure the level of investment necessary to grow the bank while serving our customers efficiently and effectively.

“I’m very proud of what the team has achieved in what is a very competitive UK banking market and I recognise this news will come as a shock and disappointment to colleagues, customers, intermediaries, and others. We will do everything we can to answer their questions and address their concerns over the coming weeks.”