A FTSE 250 bank has a new boss and plenty of challenges to confront . In this week’s column, Samuel Norman looks at what could be next for OSB.

Enrique Labiano confronted a tricky inheritance when he got his feet under the desk on his first day at the helm of OSB on Tuesday. 

The former Santander chief spent eight years as a partner at consultancy McKinsey before heading to the Spanish banking giant to lead its retail arm. At Santander, he had been in contention to replace Mike Regnier, who bowed out as chief executive of the UK arm at the beginning this year. 

But while he was passed over for the top UK job, he was poached in early 2026 by the FTSE 250 mortgage specialist Onesavings Bank, handing him the reins of the Kentish challenger. Across the group, he will be responsible for the group’s bands including Kent Reliance, Charter Savings Bank and Precise Mortgages. 

He joins at a turbulent time. OSB’s share price has traded 10 per cent below the sector average four times since 2021. Only two banks have suffered more volatility: Close Brothers, which was stung by the motor finance debacle, and Metro Bank, which was rescued by a Colombian billionaire for £925m in 2023. Comparatively, Paragon, a closer peer to OSB specialising in residential and buy-to-let mortgages, has had an easier ride. 

But for Labiano where there is volatility, there is opportunity.

Changing the tune

“One of the easiest potential wins is a re-rating from reducing noise around the stock,” says Benjamin Toms, equity analyst at RBC.

To do so, Labiano will be swimming against a tidal wave of critical headlines. In 2021, the bank delayed its results after uncovering potential fraud involving a corporate client. It went on to report exposure of up to £26.8m related to financing for a non-bank lender. Two years later, OSB would issue a surprise profit warning, slashing its stock by nearly a third in a single trading session after it discovered customers at its residential mortgages arm were refinancing or moving off standard variable rates much faster than models had assumed.

“Whilst it is possible to argue that there have been highs to go with the more frequent lows, the volatility has been asymmetrical,” Toms said.

He added many investors would be “willing to cap their upside if it came with lower volatility”.

Another round of chatter Labiano will face is the takeover speculation that has surrounded the UK’s specialist lenders.

Consolidation has swept the broader banking sector, with landmark deals including Nationwide buying Virgin Money for £2.9bn and Santander snapping up TSB for £2.7bn. 

OSB is regularly name-checked by investment bankers pitching dealsto Europe’s top financial institutions, City AM understands. The bank’s depressed share price has also served as an added sweetener for any suitors.

Heating up competition 

OSB shares are down over 20 per cent since January, thanks in part to a run of bruising updates. The most recent slashed its return on tangible equity (RoTE), adding to the heap of problems Labiano would inherit. 

OSB had previously guided a RoTE – which measures how efficiently a company generates profits from its core assets – of the low teens, but this was downgraded to 12.5 per cent. The cut came as part of a wider re-assessment as the bank acknowledged a more competitive lending market.

Outgoing boss Andy Golding pointed to “strong competition in the retail savings market and elevated retail funding costs”.

Analysts concurred.

“The downgrade reflects persistent competition for retail deposits and elevated funding costs, a headwind that peers such as Paragon and Shawbrook appear to be navigating more effectively,” Gary Greenwood, equity analyst at Shore Capital, said. 

But Greenwood said the pressure on its bottomline appeared to be “cyclical rather than structural”.

As he hopes to turn the page on OSB’s stormy past, Labiano will benefit from some sunnier news. The bank is poised to be a key beneficiary of the changes to MREL, capital buffer rules introduced in the fallout of the 2008 financial crisis. MREL rules dictate strict tailored requirements for banks possessing assets between £15-25bn and act as a regulatory buffer to ensure lenders remain solvent in periods of stress. . The Bank hiked the lower bound of the buffer threshold to £15bn from £25bn last year, in a major boost for the UK’s mid-cap lenders.

Under the new framework, OSB can replace its expensive debt for lower-cost retail deposits, in a move that RBC forecast could provide a £35m annual boost to its revenue.

On top of this, analysts see scope for OSB to trim its capital target by another 50 basis points. The adjustment would unlock £80m in extra capital – offering the bank a timely sweetener to kickstart winning back hesitant investors.