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Commercial First ceases new lending

Commercial First is suspending all new commercial lending with immediate effect.

In November 2007 Commercial First completed the only public securitisation since the credit crisis began, but despite this it has been forced to temporarily suspend new originations as existing facilities have been fully utilised and planned new arrangements have not materialised.

Stephen Johnson sales and marketing director at Commercial First, says: “The business had received positive indications that warehouse lines and working capital funding would be made available.

“Also an initial offer for the business was received during the last few weeks; however events in the market including the recent collapse of Bear Stearns have meant the offer for the business and additional funding have been withdrawn.

“As a consequence the business has no alternative but to suspend originations. Our team are in dialogue with our funding partners to work through possible solutions for pipeline business.”

He adds: “We have explored every opportunity to obtain new funding. We have a business that made a profit of £13m last year and will make in excess of £20m this year, with a balance sheet of £1.6bn in performing mortgage assets at an average LTV of 68% and 4% margin – yet are still unable to obtain financing. It is abundantly clear the credit market has failed. “

He adds: “We have entered into a period of consultation with our staff and are exploring all available avenues to enable us to return to the market quickly. Since launch we have provided over 12,000 loans and £2bn in capital to the small and medium sized business customer.

“We have assembled a fantastic team of professionals and established a network of very loyal and supportive intermediaries. Collectively we are another victim of a banking crisis that was unthinkable only nine months ago.”

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