View more on these topics

West Brom agrees to sell Mortgageforce

West Bromwich Building Society has agreed in principle to sell Mortgageforce to the management while retaining a small minority interest.

The building society announced the move to sell the mortgage broking franchise today alongside the release of West Brom’s annual results.

A statement from West Brom says: “The society has agreed, in principle, to sell mortgage broking franchise Mortgageforce to the management for a nominal consideration whilst retaining a small minority interest.”

A separate statement within the company’s financial results says: “Having identified that the mortgage broking subsidiary, Mortgageforce, is not a core activity, the board intends to exit this business at the earliest opportunity.”

West Brom has made a loss after tax of £11.2m for the year to March 31, compared with a loss of £39.3m last year.

It now has a tier 1 capital ratio of 13.9% from 8.8% in 2009 and its core tier 1 ratio has gone from 6.8% to 11.8%.

The society attracted just over 72,500 new customers in the year to the end of March, with retail balance inflows of £2.9bn and residential mortgages covered 1.29 times by retail balances.

On the society’s results Robert Sharpe, chief executive of West Brom, says: “The improvement on last year’s results clearly indicates that we are starting to see the benefits of the West Brom’s ’Back to Basics’ strategy with its renewed focus upon our traditional strengths as a regionally-based building society and concentrating on our core activities of savings and residential mortgages.

“This means that we have split the group between the traditional building society operations and those that are now in run-off, such as commercial lending, and we are applying the right management focus and skills to each.

“The economic outlook is likely to stay unsettled for some time but the West Brom’s ’Back to Basics’ strategy, about which we expect to make further announcements in the near future, allows us to look forward with genuine confidence as market conditions gradually recover.”

Total assets at the society have reduced by 9.4% to £8.3bn, while retail savings balances rose slightly.

West Brom has cut costs over the last year by 26% and over the last 18 months staff numbers have gone from just over 1,000 to around 800.

The society strengthened its capital by converting its debt into capital via an instrument called Profit Participating Deferred Shares last July.

The exercise, the first and only of its kind, raised £182.5m to strengthen West Brom’s balance sheet.

Recommended

March saw 45% lift in purchase loans

House purchase loans rose by 45% year-on-year in March, marking the ninth month in a row of annual growth. Data from the Council of Mortgage Lenders shows there were 45,000 loans for house purchase in March, worth £6.3bn. This was an increase of 25% in volume compared with February. But the remortgage market was down […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • peter 1st December 2010 at 5:24 pm

    Is Basics anywhere near West Bromwich?

  • Dan McGeehan 26th May 2010 at 5:49 pm

    Its only an Agreement in principle…how many times have you had one of them in the last 12 months and then had it fall down when you go to full application.

  • Geoff Laird 26th May 2010 at 4:58 pm

    If Robert Sharpe has decided to sell a non core activity then this speaks volumes since if Mortgage Force were contributing significant profits to West Brom, he would have elected to retain the brokerage given the need to maximise distribution for any upturn in the Market, but clearly this was not the case.
    Only time will tell if this was a shrewd move or not but now it is up to Mr Duffy to prove West Brom wrong

  • John Pinkman 26th May 2010 at 3:54 pm

    Nice to hear a lender going back to basics, I wish some of the larger institutions would do likewise and leave the Broking to the experts…

  • colin 26th May 2010 at 3:04 pm

    no doubt a very smart move by Mr Duffy……nick it for a song in bad times and sell it back to a instit in the good terms when they return