Countrywide move furthers its UK sub-prime ambition

US mortgage giant Countrywide Financial Corp moved a step closer toward its objective of setting up as a UK-based sub-prime lender last week with its purchase of the remaining 30% stake in mortgage processor Global Home Loans.

Countrywide bought the shares from Barclays Bank which owns The Woolwich, adding to the 70% of GHL it already owned. Barclays is preparing to bringing its processing operations back inhouse when an outsourcing contract expires in April 2006.

Mortgage Strategy revealed exclusively last year that Countrywide had killed plans to create a sub-prime lending division in the UK, for the time being.

In an interview with MS, CFC chairman and chief executive Angelo Mozilo confirmed the idea had been put on hold but promised the company would revisit the issue “at some time during the next two years”.

The Countrywide CEO said he could not elaborate more on its UK plans at the time, but maintained the idea would indeed be looked at again.

In June 2003 reports began to circulate that Countrywide was considering entering the UK sub-prime arena.

The company was rumoured to have begun the search for executive talent to run the unit, with Michael Bolton, then director of mortgages at BM Solutions, being one of the candidates whose name was being bandied around at the time.

While GHL refuses to comment further as to what the stock buy up will mean for the firm, Simon Hinshelwood, chief executive officer at GHL, gives a pretty clear indication in the accompanying press release.

In it, Hinshelwood says: “We have valued our relationship with Barclays and are committed to facilitating a smooth transition with them. Following Countrywide’s acquisition of the remaining stake in the joint venture, GHL will be able to better leverage Countrywide’s deep mortgage lending expertise as we focus on building our mortgage business in the UK.”

GHL says staff working on or supporting mortgage processing for Barclays will remain in their current locations but will become Barclays employees upon or before the expiry of the contract, and transfer under TUPE regulations.

GHL staff members are represented by the trade union, Amicus, who the firm says will be fully involved.

Mike Rogers, managing director Barclays UK retail banking, says: “The Woolwich, which is Barclays’ mortgage brand, is powerful and well recognised.

“We are investing heavily to deliver great products and service to customers.”