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.