Web 2.0 and Retail Banking: Less Hype Equals Opportunity

Web 2.0 is one of the most misused and abused terms in business today. While consumer expectations advance at a fast pace, a gap between consumer expectations and bank delivery grows. Without a change in strategy, this delivery gap will widen and threaten the bottom line, according to a new report, Web 2.0 and Retail Banking: Less Hype Equals Opportunity from Celent, a Boston-based financial research and consulting firm.
Key findings of the report include:
• Celent defines Web 2.0 as the tipping point in the evolution of the Internet, where consumer behavior and activity and their enabling technology emphasize the user experience and capabilities as engaging, interactive, and collaborative. Web 2.0 represents a departure from the aspects of much of the Internet's legacy roots of one-way communication and static, desegregated data. Absent the hype and technobabble, Web 2.0 might simply be characterized as "the dynamic Internet" or "the interactive Internet."
• Banks can realize the untapped opportunity Web 2.0 provides by:
1) Realizing Web 2.0 is not a specific technology; rather, it is a shift in consumer behavior (largely online) and the technology supporting it.
2) Understanding the drivers of the behavior shift as well as the behaviors and expectations of post-Web 2.0 consumers.
3) Recognizing that the gap between traditional banking products and services and the expectations of the post-Web 2.0 consumer is significant, and it grows every year the bank does not evolve.
4) Creating a roadmap to transition the bank's products, services, and marketing and sales methodologies to remain relevant to a rapidly evolving consumer population.
5) Accepting that-though some banks will not change, and still continue to exist-those that can evolve their product and services offerings to be on par with and relevant to an evolving consumer population will see the greatest returns.
6) Applying a smattering of pixie dust in the form of add-ons or queues such as charts, or participating in a social network, will move the needle, but decades of consumer evolution require looking at the bank's product and services in a new way.
• Banks have not been on the leading edge of online consumer sales. Consumers have continued to change, and so have banks, but at a much slower rate. While consumer expectations advance at a faster pace than banks can support, the gap between expectations and delivery grows, threatening many banks' bottom lines.
• Generation Y's expectations of the retail experience (online and offline) have been shaped by the Internet. The wise retail banker will look at this segment's needs and begin a transition plan to ready the bank to serve them. Without a change in strategy, this delivery gap will begin growing at a faster pace, particularly as Generation Y-which will include 84 million US consumers in 2010-becomes a more important market segment for banks. Combined with the following generation, dubbed Generation Z, these groups will represent over half (53%) of the US population in 2020 and nearly two-thirds (64%) in 2030.
• Although Web 2.0 will have the greatest impact on the bank's marketing and sales strategy, the impact of Web 2.0's enabling technology will be great. Addressing consumers' broadening expectations will require a cultural shift within the bank as well as a technical one. Where the experiential side of Web 2.0 presumes information transparency and richness as well as collaboration, it will impact system design and system integration. The shift in design patterns and methodologies will benefit the end consumer and internal bank staff, and in time will help the bank deliver new products and services faster and at a lower cost (based on the increasing share of standards-based development).

www.bobsguide.com

UK looks to become a global provider of Islamic finance

A government organisation is looking to educate financial institutions in a bid to help the UK become a global provider of Islamic finance.

UK Trade & Investment, which incorporates the work of the Foreign & Commonwealth Office, has leant its support to a breakfast briefing hosted by the Association of Corporate Treasurers.

The aim of the briefing is to give financial companies more understanding of Islamic finance by explaining whom it applies to, how it can complement existing financial services strategy, and what the benefits are.

Sharia Islamic law forbids the practice of making money from money, such as charging or paying interest.

Sharia-compliant mortgages involve the bank buying the property with the buyer then buying it back and renting it at a slightly inflated price. Buyers also have to be sure that the money the bank is using to buy the property has come from permissible sources.

The sector is currently thought to be worth $500bn (£294bn) and it is predicted the sector will grow by a further 15% per annum over the next few years.

Andrew Cahn, chief executive of UK Trade & Investment, says: “In these tough times it's more important than ever that we make the most of growing sectors like Islamic finance.

"That's why it is important the UK's financial industry provides an open door and positions London as a leading western financial centre for Islamic finance.”

Richard Raeburn, chief executive of ACT, says: “A reduction in funding options with markets offering continually more expensive rates means that seeking alternative funding away from the traditional routes is an increasing trend.

"Islamic funding may not have been at the forefront of borrowers’ minds but the credit crunch has made an understanding of this market essential.”
www.mortgagestrategy.co.uk

edeus rumoured to be going into administration

Rumours are rife that edeus has gone into administration and that chief executive Michael Bolton has been made redundant from the firm.

Managing director Alan Cleary is thought to still be at the lender.

Nobody from edeus was available to comment.

edeus launched into the mortgage market in a blaze of glory in July 2006 with Michael Bolton and managing director Alan Cleary (both former HBOS employees) at the forefront of the firm.

The duo assembled an all star team from across the industry and were even
one of the first firms to adopt ‘eu’ at the end of the firm's website and email
address.

The new lender was an overnight success and edeus soon became the fastest growing new entrant the mortgage market had ever seen.

But the freeze in the credit markets quickly put paid to the ultimate Bolton and Cleary dream ticket.

edeus was quick to retaliate to market conditions and after successfully recruiting over 100 staff from rival lenders soon had to put out the fire with a swathe of redundancies in November last year.

By April this year another 50 jobs had gone to the wall.

In July 2008 it started to offer its now renowned and since copied Golden Goodbye offer to borrowers on its books. It also started to offer structured savings products from Newcastle Building Society.

Bolton and Cleary unveiled the name of their new lender edeus in July 2006, officially launching in September 2006.
Bolton said at the time the firm had been looking for a name that emphasised innovation, that was challenging and “would echo our core brand values of excellence, service, quality and speed”.

www.mortgagestrategy.co.uk

Not such a good idea after all?

With the nationalisation of the Bradford & Bingley, the last of the demutualised building societies has lost its independence.

Some people have been tempted to argue that this proves that converting from a building society to a bank was always a bad idea.

What looked like a good way of expanding business and becoming a modern, thrusting, go-getting organisation for the modern age (in other words, a bank) became something different - a new and exciting way to lose money.

But John Wriglesworth, an analyst of building societies for the investment bank UBS in the 1990s, and later a senior executive at the Bradford & Bingley, sees things differently.

"The reason the demutualised societies have gone has been due to investors having panic attacks," he said. "It has been a self-fulfilling, cataclysmic spiral into the abyss."

Way back when

Just 11 years ago, demutualisation among building societies was all the rage.

The year 1997 marked a sea change for a movement of safe and sound financial organisations, most of which had started up in the 1800s. One after another some of the biggest names jumped ship.

The Abbey National had struck out on its own back in 1989 to become a bank and, overnight, it converted its savers into shareholders. But with the Cheltenham & Gloucester agreeing to sell itself to Lloyds bank in 1995, the dam burst. Within the space of twelve months in 1997, the Alliance & Leicester, Halifax, Northern Rock and the Woolwich, all well known mortgage lenders, decided they wanted to be banks as well.

The Bristol & West jumped directly into bed with the Bank of Ireland that year, and two years later the Birmingham Midshires did the same with the Halifax. By the year 2000 the Bradford & Bingley was the last to join the stock market.

Adrian Coles, of the Building Societies Association (BSA), disapproved of all this at the time, but does not hide his amazement at recent events. "It has been utterly, unbelievably, astonishing," he said. "Seeing the swift disappearance of the former societies in the firestorm, which I don't claim to have predicted, has also been astonishing."

No guarantee

In fact the B&B directors campaigned against converting to be a bank, but were defeated after a saver from Northern Ireland, Stephen Major, succeeded in forcing a vote on the issue among members the year before.

"It's unfortunate but that's the way these things go," he told the BBC regretfully.

"Nine years ago we didn't think about credit crunches or that building societies or banks could go bust.

"There's no guarantee it wouldn't have happened anyway," he added.

According to the BSA, the total value of the payouts in 1997 amounted to £36bn in shares and cash into demutualisation. The B&B members were simply too keen to cash in on the value of their society, and so it went the same way as the other societies.

Share options

So why did all this happen?

Until the mid 1980s building societies dominated the mortgage lending business, more or less as a cartel. That changed with the 1986 building societies act, which also paved the way for demutualisation.

The house price boom of the mid and late 1980s alerted the banks to the rich picking to be had in home loans, as well as selling endowment investment policies, house insurance and, so they thought, estate agency.

They also recognised that the quickest way to get a large slice of this profitable business was to buy up an existing lender. And according to John Wriglesworth, directors of building societies were only too keen to join them. "They used words like 'freedom to compete' and 'access to capital,' but the main reasons were excessive pay, share options and testosterone".

Investment banks from the City and Wall Street did their best to speed up the process, touring the boardrooms of the larger building societies, convincing their directors that now was the time to break the mould and demutualise.

The fact that these investment banks often made large fees as advisers to the eventual flotations or takeovers was not a coincidence.

Funding

For the past decade the banks, building societies and other specialist lenders have all taken part in the biggest house price, and mortgage lending, boom in the UK's history.

One thing that has helped the banks in particular has been their ability to borrow money from other financial institutions, rather than just from savers, to fund their mortgage lending.

Building societies are restricted by law to funding just 50% of their lending this way and the average among societies is much less, at about 30%. It is this borrowing, and the current difficulty in repaying it, that lies at the heart of the problems that have been experienced by the Northern Rock, Halifax and now the B&B.

"With hindsight they raised more money than they would have done had they stayed as building societies and with the credit crunch that now looks like a mistake," said Adrian Coles.

But John Wriglesworth argues that losing their independence because of this was certainly not inevitable for the former mutuals, especially for the Halifax and the Alliance & Leicester. "They had a viable comprehensive strategy - their demise is due to the exceptional circumstances, based on fear breeding fear, not their areas," he said.

"There was no reason for the Northern Rock to go down the sub-prime route, or for the Bradford & Bingley to go down the buy-to-let route."

http://news.bbc.co.uk/

FSA fines GE Money £1.12m

The Financial Services Authority has fined GE Money Home Lending £1.12 million for systems and controls failings that resulted in 684 borrowers suffering financial loss in excess of £2.3m

This is the first time the FSA has fined a mortgage lender in relation to its lending processes.

The FSA says this action sends a clear signal that lenders’ management must treat all their customers fairly and prevent them suffering detriment.

The news follows concerns raised by housing minister Caroline Flint at this week’s Labour conference, on the number of second charge repossessions initiated by GE Money. For the full story see this week’s Money Marketing.

The regulator revealed that the customers affected were those whose mortgage contracts were subject to a retention clause, where a sum of around £3,000 was withheld from the mortgage advance - typically where the borrower was required to carry out specified repairs to the mortgaged property.

The firm’s mortgage terms and conditions provided that these retention monies would be retained for six months and that during this time the borrower would be charged interest on the full mortgage loan including the retention monies. After six months the retention monies and accumulated interest should have been released to the borrower or applied to reduce the outstanding mortgage loan.

The firm’s terms and conditions did not make it clear to all customers that they would be charged interest on the full mortgage loan, including the retention monies, during the six month retention period. The FSA has also revealed that due to inadequate systems and procedures at the firm, retention monies and accumulated interest were not always paid to borrowers or applied to their outstanding mortgage loan after six months and the firm continued to charge some borrowers interest on retention monies beyond the six month retention period.

When a mortgage with an outstanding retention was redeemed, the firm did not always deduct the retention monies and accumulated interest from the outstanding mortgage loan. This resulted in some borrowers overpaying the firm when redeeming their mortgage.

FSA director of enforcement Margaret Cole says: “The firm’s failings were serious because a large number of borrowers, including some with impaired or non-standard credit profiles, were put at risk of financial loss. The firm identified the systems and control failings in 2004, but despite internal recommendations that improvements be made, no corrective action was taken for more than two years.

“I emphasise that we expect high standards by lenders in their administration of their mortgage book.”

As a result, the regulator has ensured that customers who suffered financial loss as a result of the retentions failings were properly compensated.

GE Money says it will commission an external review of the issue and will share the report with the FSA. It says it also has stopped using the retentions mechanism.

Because GE Money agreed to settle an early stage of the proceedings, it had a 30 per cent reduction in the FSA penalty. The FSA says if it were not for this, it would have fined GE Money £1.6m.

In total, including both regulated and non-regulated mortgage contracts, GE Money has paid 5,245 customers redress of £7.04 million in relation to their mortgage retentions.

www.moneymarketing.co.uk

Ex-mutuals fall to the bottom of food chain

The financial jungle is full of endangered species at the moment. But building societies - those perennial dinosaurs of the sector - appear to be in relatively fine fettle.

With families seeking safe havens for their cash, and the global lenders on the retreat, dull and conservative customer-owned lenders have been hoovering up record savings as their commercial cousins stagger under the weight of toxic debts.

Building society bosses must be taking particular satisfaction at the beleaguered state of those ultimate turncoats - the former mutuals.

Abbey National was the first of the building societies to seek a stock market listing in 1989, but the high tide was in 1997, when four societies floated.

For a while the wave of demutualisations proved to be a boon for customers, who enjoyed a cash and shares bonanza of £20bn. Yet many of the former societies have since found themselves in deep water.

The woes of Abbey were an early foretaste, as the firm's overly-ambitious Treasury department racked up huge losses on dodgy loans, forcing it into the arms of Spain's Santander in 2004.

More recently, Alliance & Leicester was snapped up by Santander after being pushed into the mire by the wholesale lending drought. HBOS, the owner of former society Halifax, is being scooped up by Lloyds TSB amid its own funding woes.

Bradford & Bingley is expected to fall into the hands of a rescuer under the worried watch of the Financial Services Authority. And the less said about Northern Rock the better.

Adrian Coles, head of the Building Societies Association, is scathing about the record of members that abandoned their mutual status.

In their eagerness to drive up returns, managements bit off more than they could chew, he claims. 'They took their eyes off the customer focus and began to think money was more important than people.'

Bruno Paulson, UK banks analyst at Sanford Bernstein, is a little less emotive. He argues that firms such as A&L and B&B simply lacked the scale and diversification to withstand a major market maelstrom.

HBOS and Northern Rock expanded their businesses at breakneck speed, leaving them with too little funding from depositors when the wholesale markets dried up.

He said: 'Some of the demutualised lenders had a decent run for a while, but they all ended up coming a cropper. For some the problem was a lack of scale, while others misjudged risk as they chased growth and diversification.'

For investors who held onto their shares after demutualisation, the record has been pretty grim. For example, B&B floated at 248p, but it is now trading at 28¼p. Northern Rock started life on the stock market at 452p, but shareholders are expected to get precious little compensation following its nationalisation.

That said, it is possible to display a little too much schadenfreude at the fate of the ex-mutuals.

www.thisismoney.co.uk

Temenos names Mike Head global partners director

Swiss core banking vendor Temenos has appointed Mike Head to lead the development of its global partners programme.

As global partners director, Head is charged with expanding the programme to include new firms as Temenos looks to increase its geographic reach and capacity and win clients for its T24 and core banking products.

Reporting to COO Mark Cullinane, he will be a member of the management board and based in the company's London office.

Previously Head was programme director for German software giant SAP - building its reseller partner channel in Europe. After leaving SAP he was responsible for the start up of software implementation and development vendor Pecaso.

Andreas Andreades, CEO, Temenos, says that having built up its direct channel, the firm is now looking to expand the partner programme and become the "preferred partner of the world's largest systems integrators".

Temenos already has partnership deals with IBM, HP, Metavante, Oracle, Logica and Interactive Data, among others.

Says Head: "My role will be to bring to the core banking market the practices and the discipline that a partners programme requires for success".

www.finextra.com

HBOS 'might be bought out by JPMorgan'

A consortium headed by US investment bank JPMorgan could soon take over HBOS, the Daily Telegraph reports.
While the members of the group have yet to be finalised, the bank is thought to have already held talks with parties including the National Australia Bank and private equity firms.
The Spanish financial services firm Santander, which recently announced a successful takeover bid for rival UK mortgage lender Alliance & Leicester, is also likely to be approached, sources indicated.
For its part, JPMorgan is understood to be more interested in taking up an advisory role for the consortium, rather than purchasing large pieces of HBOS itself.
This is due to the fact that the bank is otherwise engaged, after taking over stricken investment bank Bear Stearns in March.
Commenting on the potential acquisition to Bloomberg, Singapore-based Leslie Phang at Schroders said: The trend in consolidation in the financials is poised to accelerate.''
None of the parties apparently involved in the deal wished to comment.

www.bobsguide.com

TietoEnator Turnaround Continues

IT services company TietoEnator has reported a 270% increase in net profit to 18.7m euros ($30m) for the second quarter, on revenueup 11% at 480m euros ($761m).

For the first half, the company reported a 20% increase in net profit to 35m euros ($55m) on revenue up 8% at 948m euros ($1.50bn). During the quarter, processing and network revenue grew 16% to 113m euros ($179m), healthcare and welfare revenue rose 25% to 42m euros ($67m), telecoms and media revenue increased 10% to 178m euros ($282m), and banking and insurance revenue grew 9% to 77m euros ($122m). Geographically, Finland and Sweden contributed to 74% of revenue.

Hannu Syrjälä, president and chief executive at TietoEnator, said: "The second-quarter results strengthen our view that we are on the right track in turning the company around. We have concluded several major agreements in 2008 and succeeded in outpacing our market in many areas, reflecting the good momentum in the company.”

www.computerwire.co.uk

Government launches rent now buy later scheme

The pilot project will be open to households earning under £60,000, who will be able to rent the property at a discounted rate for two or three years, and will be given the option to buy it.

Rents will be 80% or less of the real market value, in order to save up for a deposit.

The scheme, which will be managed by the Housing Corporation, will be open to buyers who qualify for the government's new-build HomeBuy scheme, but are currently unable to buy. They would have an option to buy 25% or more of the property at any time under the scheme.

The government had previously extended the shared ownership scheme from key workers to those households earning £60,000 or less.

Bids will have to be made for the rent first, buy later scheme through registered social landlords.

Lembit Öpik, Liberal Democrat shadow housing minister, says: "Another day, another new affordable housing announcement. The government’s hot air will not hide the fact that 10% fewer shared ownership homes were provided last year than in 2006.

"What is strangely absent from this announcement is any suggestion of how the government imagines the rent-to-buy scheme will be paid for."

He adds: "With building firms making redundancies and councils strapped for cash, who does the government expect to fund it? Councils should freed to borrow so they can buy up empty homes to meet the huge demand in social housing."

www.mortgagestrategy.co.uk

Peter Heigho (Trigod/ The Key)

Peter Heigho, the designer and founder of both the ‘Trigold’ and ‘The Key’ software systems, has joined Enterprise Group as its head of e-commerce.

Heigho is tasked with developing Enterprise’s back-end processing systems and the ongoing integration of EDGEv2 with a growing list of third party systems.

This appointment follows recent announcements from Enterprise regarding high profile promotions and departures, indicating that Enterprise is rapidly adapting its senior team to the changing market conditions and its future strategy.

Michael Clapper, Enterprise Group’s CEO, says: “Peter’s track record speaks for itself and we are extremely fortunate to secure his invaluable experience which will help ensure our future success.”

“We now have over 10,000 brokers using the broker-facing ‘EDGEv2’ system, and we have already launched two of our new consumer-facing affiliate sites.

"Our strategy is now to focus on our strengths as a technology provider - specialising in the mortgage and loans space, and adding a range of products where consumers and brokers need accurate and fast comparison and execution.”

Heigho adds: “I have been seriously impressed with Enterprise, its team and its EDGE system.

"Having worked very closely with many systems and teams within the mortgage industry, I am in no doubt that Enterprise has a very exciting future and I’m very much looking forward to being a part of it."

Nationwide launches 48-strong broker sales force

Nationwide has launched a 48-strong broker sales force in a bid to show its commitment to the intermediary market.

Each of the business development managers will be supported by a sales support adviser who will handle queries and trouble-shoot problems when BDMs are unavailable.

Nationwide says it also has a dedicated team of telephone-based business
development advisers who will concentrate on intermediaries based in
more remote geographic locations.

The sales force will be headed up by head of sales Ian Andrew who joined last year from Northern Rock.

Nationwide group executive director Matthew Wyles says: "At a time
when some lenders are pulling back, Nationwide is renewing its long-term
commitment to the intermediary market. The new sales force is part of a
broader initiative which also includes a review our mortgage processes
to make them more broker friendly and a slick new online system."

Your podcast guide to... Treating Customers Fairly

http://www.cii.co.uk/pages/news_events/tcf.aspx

C&G appoints new intermediary sales director

Cheltenham & Gloucester has appointed Jon Farley as its new intermediary sales director.

Farley joins from Barclays where he was regional sales and service director at its premier banking division. He will start at C&G on July 7.

He will be responsible for growing and developing C&G’s intermediary proposition in the marketplace.

C&G managing director Joy Griffiths says: “Jon will be a strong addition to our leadership team. He has extensive experience of sales and relationship management in a number of industry sectors and will play a key role in ensuring that we continue to grow our intermediary business.”

Farley adds:“C&G enjoys a longstanding, well regarded reputation within the intermediary market and this appointment reflects a real commitment to this sector. I am looking forward to taking on the challenge of this new role and continuing the growth of the C&G offer.”

www.moneymarketing.co.uk

87% of assessed firms failed to meet March TCF deadline

Only 13 per cent of firms assessed by the FSA met the March treating customers fairly deadline, which required them to have management information in place to test their TCF systems.

The FSA says that many firms have invested “significant time and energy working to measure TCF” and the regulator still expects 80 per cent will meet the December deadline.

The FSA has published its latest update on firms’ progress towards the December deadline, which requires all firms to be able to demonstrate they are consistently treating their customers fairly.

The regulator says it will take “tough action” on the worst performing firms, including enforcement action with increased penalties, a requirement for firms to hire external consultants and visits from FSA specialist teams to assess firms’ progress.

The regulator has published further material illustrating good and poor practice as part of its update, using examples observed during its recent assessments.

The FSA says an update on the progress of small firms in particular will be published early next year.

FSA director of treating customers fairly Sarah Wilson says: “Having appropriate MI or other measures in place puts firms in a position where they can measure the quality of the outcomes they are delivering for consumers. These results show that adequate MI is not yet fully in place in the firms assessed – it does not mean that they are treating their customers unfairly.

“However, we now expect all firms to maintain their momentum and to undertake a significant amount of further work to meet the December deadline of demonstrating that they are consistently treating their customers fairly.”

www.moneymarketing.co.uk

Halifax's £245 fee for a new mortgage

The Halifax, Britain's biggest mortgage lender, is to introduce a £245 charge for new customers. Its so-called 'mortgage account fee' will apply even to those who choose to pay a higher interest rate to avoid arrangement fees.

The bank said the new fee will replace its previous £175 mortgage exit arrangement charge.

It scrapped the charge last July following pressure from the Financial Services Authority watchdog. Critics said the bank, owned by HBOS, is simply recouping lost revenue.

Louise Cuming, head of mortgages at moneysupermarket.com, said: 'HBOS has waited until the exit fees debate has died down before sneaking in a more expensive charge. I urge HBOS to scrap this decision.'

The FSA, which regulates banks, said the matter is not an issue for it.

A Halifax spokesman said the new fee is clear and upfront and replaces several charges.

'We are very late introducing it,' she added. 'The Abbey did it a year ago and is charging £350. Our single fee is less than the total of all the previous fees we have charged.'

www.thisismoney.co.uk

IMLA and the CML pair up on lender IT survey

The Council of Mortgage Lenders and the Intermediary Mortgage Lenders Association have teamed with Frank Eve Consulting to analyze how lenders and brokers use the internet to speed-up the lending process.

This year the study will focus on how lenders integrate their technologies into the broker point of sale systems and the priorities for lenders in terms of third-party integration.

It will also be extended to review broker point of sale systems, application processing systems and sourcing systems. The goal is to help lenders and brokers establish an overall e-commerce strategy and prioritize IT spending.

The study will define basic threshold requirements, best practice and emerging best practice in lender-broker technology.

Data collected will be used for the Mortgage Strategy Technology Service Awards to be presented at a presentation lunch in November.

Frank Eve, managing director of Frank Eve Consulting, says: “This year’s study will show how the mortgage e-commerce environment is adjusting to the effects and implications of the credit crunch. We will be evaluating Lender – Distributor connectivity and considering where lender strategies will lead the industry, with particular focus on how lenders are integrating with broker point of sale systems and trading platforms.”

Michael Coogan, director general of the CML, adds: “One year on, and the market environment is very different for lenders and brokers as we embark on this year’s benchmark study.

“But the application of information technology will continue to be important to our industry. We are therefore pleased once again to support the study, and look forward to seeing how IT innovation is helping lenders and intermediaries address the new challenges confronting the industry.”

GE Money finalises Polish bank deal

GE Money announced that it has closed the transaction to buy Poland’s BPH Bank, once the country’s third-largest, but now barely making it into the Top Ten there. In its glory days, BPH was the subsidiary of Germany’s HVB, and acquired a reputation for good customer service and fast growth. When Italy’s UniCredit bought HVB in 2005, BPH was partially merged with UniCredit’s Polish bank, Pekao, the country’s second-largest bank, taking the corporate banking, investment funds, stock broking divisions.

Having lost many of its best employees, large parts of its most lucrative businesses, and several hundred branches, BPH was still an attractive target for GE Money, which was looking to expand in the Polish market. GE Money paid about €625 million ($970 million) for BPH, not a lot for a Polish bank, and plans to invest an additional $50 million this year, with a total of $150 million to be invested over the next few years. Polish regulators approved the sale of BPH this month, and the two banks should merge next year. The new bank will be headed by Jozef Wancer, who originally helped build BPH into one of the country’s largest banks. A priority will be to re-establish the bank’s corporate banking. In December, BPH had no corporate customers, now it has 600, said Mr Wancer. By the end of the year, he hopes to double that. The goal is for the bank to climb back into Poland’s Top Five in five years.

The two banks’ strength is in consumer lending, where GE brings an aggressive approach to mortgage and consumer loans, while BPH has a national network, and a well-known brand. GE has a problem loan ratio of about 1.6 per cent, while BPH’s is a better-than-industry-average of 4 per cent.

“We are very bullish on the prospects of the Polish market,” said Dmitri Stockton, president and chief executive of GE Money in central and eastern Europe. “Our risk management capability is one of our strengths. It’s a key thing we have to offer.”

www.leasingworld.co.uk

TietoEnator slumps as bid talks end

Shares in Scandinavian IT services vendor TietoEnator slumped in morning trading after it said talks with potential suitors had ended without any firm offers.

TietoEnator's shares slipped 6.3%, or EUR0.88, to EUR13.03 in morning trading after the vendor released a statement saying it had ended discussions with "a number of strategic and financial parties" after they failed to result in "any firm and actionable offers".

TietoEnator has been talking to various parties since receiving an unsolicited EUR15 per share bid from private equity firm Nordic Capital in March. The offer period for Nordic Capital's bid - which the board urged shareholders to reject - lapsed on 26 May, after being put back three times.

But in the company statement, Anders Ullberg, chairman, TietoEnator, says: "Having evaluated these alternatives and the inherent nature of each potential offeror, and their value attributes, the board's unanimous view is that it has not received a firm and actionable offer that represents a fair value for shareholders and optionholders, and therefore all discussions between the company and potential offerors have come to an end."

Norwegian newspaper Dagens Naeringsliv reported today that TietoEnator's rival EDB Business Partner had decided not to make a bid after its partner, US private equity firm Blackstone, withdrew from the process. According to the report, without Blackstone EDB and fellow consortium member Telenor could not afford to beat Nordic Capital's earlier offer.

Ullberg says the vendor will now concentrate on the restructuring and cost cutting programme it embarked on in January, designed to generate annual savings of more than EUR100 million by the end of 2009.

The performance improvement programme, followed an 18-month run of volatile earnings at TietoEnator, which had mainly been caused by project over-runs in the company's banking and insurance and healthcare and welfare units. The vendor is also eliminating 800 jobs, mainly in Finland and Sweden.

TietoEnator slumps as Nordic Capital sells stake

Shares in Scandinavian IT services vendor TietoEnator have slumped on news that Nordic Capital's bid vehicle Cidron Services has sold off a 4.4% holding in its business.

TietoEnator shares closed 8.32% lower at EUR14.76 yesterday and continued to fall in morning trading after Cidron Services said it had sold a 4.4% shareholding at an average price of EUR16.50 per share. The stock was trading at EUR14.70 at lunchtime today.

Cidron is pursuing a hostile takeover bid of TietoEnator and launched a EUR15 per share, or EUR1.1 billion, offer for the vendor in April. Since then Cidron has pushed back the offer period for its bid three times. The offer period is now expected to end on 23 May.

According to press reports investors have been waiting to see if Cidron ups its offer for TietoEnator, but the move to sell the 4.4% stake implies the equity outfit is pulling back from the bid.

The TietoEnator board has repeatedly rejected the EUR15 per share offer. Furthermore, last week a group of shareholders that hold a combined 10.4% stake in TietoEnator said they will not accept the offer. This appears to have scuppered the Cidron deal which was dependant on holders of at least 90% of TietoEnator's shares accepting the deal.

In its latest statement TietoEnator has again repeated its rejection of the Cidron offer and says its board is "in active dialogue on, other alternatives to enhance shareholder value. The board will keep the market informed if a firm and actionable alternative for shareholders materialises that could bring more value for shareholders than TietoEnator's revised strategy," says the statement.

Reuters reported last week that Blackstone, Telenor and EDB Business Partner are in talks with TietoEnator about a white-knight bid. Citing "people close to the matter", the report said the consortium is considering a bid before merging the firm with EDB.

However a separate report by Reuters rules out CapGemini as a potential bidder for TietoEnator.

According to the report, Capgemini's CEO Paul Hermelin has stated that TietoEnator is too big for CapGemini to buy.

Faster payments service launching Tuesday 27th May

The final week of testing has been completed prior to the launch of the Faster Payments scheme and consumer advice has been issued.

The Faster Payments Service, which includes standing orders, is the banking industry’s response to Government concern that the UK did not have a low cost, quick and efficient electronic payment mechanism.

With just a few days to go until the launch of the new scheme, APACS, the UK payments association, has issued new materials to help customers wishing to benefit from the service, as it begins its rollout on 27th May.

APACS has produced a new, downloadable advice guide, How to use the Faster Payments Service, along with an online easy-to-use sort code checker www.canipayfaster.co.uk. Customers can input any UK sort code to check whether it is able to receive Faster Payments.

Paul Smee, APACS chief executive said: “The final part of this enormously complex project has been to test the new system in a live environment. This week hundreds of penny payments have successfully been made between the participating banks. The Service is now ready to start being rolled out to customers next Tuesday.

“Although the initial rollout will be gradual, and some customers may not be using the new service immediately, we expect that in the coming months this will ramp up to enable large numbers of customers to benefit from it. After such substantial investment by the industry we’d like, in time, to see the new Faster Payments Service being used for all of the UK’s internet, phone and standing order payments.”

Stephen Ley, a partner in Deloitte’s Enterprise Risk Services practice specialising in payments and retail banking said: “The Faster Payment system will be a challenge for banks which could lead to increased risk of fraud as it will be harder for banks to detect and block fraud in the time window available. The existing process relies, in part, on banks having sufficient time to detect suspicious transactions.

“A number of banks have opted to issue card readers which work with their customers’ debit card to create a more secure authentication and authorisation process. With over 20 million customers regularly using internet banking, increasing online safety is clearly a priority.”

When Faster Payments goes live transactions will be limited to £10,000 for immediate payments and £100,000 for standing orders, although some banks may choose lower limits. In time it is expected that these limits will be increased.

FRSGlobal to announce regulatory reporting solution with Temenos T24 at global client forum

FRSGlobal, the only global supplier of regulatory risk and compliance reporting, with coverage for over 30 countries, will announce the launch of its regulatory reporting solution integrated with Temenos T24 at the annual Temenos Client Forum in Rome.

Temenos, under the terms of the current agreement, plans to develop and maintain the product interface between its T24/Global application suite and FRSGlobal’s FinancialAnalytics regulatory reporting platform. The combined solution is available to international banks and financial institutions.

The annual Temenos Client Forum brings together clients, management, alliance and business partners, industry analysts, potential clients and other special guests from around the world. This year the event is being held at the Rome Marriott Park Hotel.

FRSGlobal provides 1500 financial organisations – including 41 of the top 50 global banking institutions – with enterprise risk and regulatory compliance reporting solutions that enable them to increase operational efficiency, reduce costs and mitigate risks.

Roy Barnes, Alliances Manager, FRSGlobal says “We continue to increase our market share amongst banks who are looking to improve their international reporting capability, which is becoming an even greater imperative in the current climate.

“We are particularly pleased to figure as a Referral Partner to Temenos, who are consolidating their position also as the leading supplier of core banking software solutions in several sectors of the banking industry. The partnership has been created to enhance the Temenos solution offering to banks in the tier one, multi-country market and is complimentary to their existing TFR regulatory reporting solution for the smaller institutions.”

Building societies look to online channel

Over half of the UK's building societies are planning to introduce an online savings channel in the next year in a bid to attract and maintain customers during the current economic gloom.

According to a survey of executives at building societies by Nordic IT services outfit TietoEnator, only a quarter of building societies questioned already offer online savings services, but around 55% of respondents are planning to introduce the channel within the next 12 months.

TietoEnator says this is in direct response to the key challenge that building societies are facing of securing funding by attracting and retaining savers. Over 87%of survey respondents said introducing an online savings channel is "important", with 26% stating it is "crucial".

Half of those questioned fear savers may move to other providers in order to take advantage of services such as online savings accounts.

Commenting on the findings, Adrian Coles, Director-General, Building Society Association, says: “Building societies have always been keen to innovate in order to deliver what their members want. Online savings are no different and I'm sure we will see substantial development over the next 12 months.”

Credit scores go online for free

Credit ratings for more than 1.5m companies in the UK are now freely available following the launch of an online reviews directory. BView, which has been live for a month, lists the details of more than 2.3m trading companies, including credit ratings, customer reviews and scores on quality of service and reliability.

Unlike opt-in business directories and review sites, companies cannot remove their profiles and the interactive nature of BView means that individuals can search through league tables of businesses ranked by their customers.

The credit information has been provided through credit reference agency Equifax and is updated every month, according to Brad Liebmann, founder and chairman of the web portal. He hopes the site will become the "Wikipedia" of commercial data, promoting good practice and exposing rogue traders. "We are taking information that is opaque and exposing it. This level of transparency is the only way forward for UK businesses," he said.

However, not everybody is convinced of the benefits with some observers saying it could do more harm than good. "The guise it is in at the moment, it’s dangerous," said Ron Bidwell, group credit manager for Bridisco. "A lot of the information from what I’ve seen looks really out of date, more than a month old, so you’ve got companies on there that are said to be financially stable when in reality they’re not."

He added that the accuracy of the information posted is questionable and could easily be skewed. "People are quicker to reprimand than praise so it is 20 times more likely you’ll get someone saying something bad than good," he said. "Also, who’s to stop me registering under 20 different names and slagging off all my competitors?"

Liebmann said it will only remove any reviews or comments that are obscene and malicious in intent but aims to mitigate against people trying to manipulate ratings by weighting the value and influence of reviewers. "We accept that not all businesses will like being up there and that we could either be loved or loathed," he said.

With businesses ranging from sole traders to limited companies, he added that the site will create a level playing field for everyone, regardless of how big or small the marketing budget is. Every business has a free profile but can take out a premium membership at £149 per annum for added benefits such as a web link and logo.

Professor Andrew Burke of Cranfield School of Management, whose area of expertise is small to medium sized enterprises, believes the portal will radically transform the dominant economic model. "The site encourages innovation as businesses now need to be more competitive and responsive to customer needs, thereby strengthening the UK economy," he said.

Recession is looming, admits IMF

2 April 2008

The International
Monetary Fund today raised the spectre of outright global recession, blaming the
worst financial crisis in the US since the Great Depression.

In a hugely
pessimistic internal document, the IMF cuts its forecast for global economic
growth in 2008 from the 4.1% it predicted in January to just 3.7%.

'The financial shock
that originated in the US subprime mortgage market in
August 2007 has spread quickly, and in unanticipated ways, to inflict extensive
damage on markets and institutions at the core of the financial system,' the
report says. 'The global expansion is losing momentum in the face of what has
become the largest financial crisis in the US since the Great Depression.'

The paper, obtained
by Bloomberg News at an event for Asian ministers and central bankers in
Vietnam, said there was a 25% chance global growth would drop to 3% or less this
year and next - a pace the IMF described as equivalent to a global recession.

Mortgage approvals fall 40 per cent, says BoE

Mortgage approvals
have dropped 40 per cent from a year ago, with lending now at its lowest level
for 13 years, according to stats from the Bank of England.

The number of loans
approved for house purchases fell to 73,000 in February, with remortgaging
falling to 111,000. Figures released by the BoE also show that equity withdrawal
is now at its lowest level for three years.

It says that equity
withdrawal in the last quarter of 2007 fell by 33 per cent compared to the
previous three months. It was down by nearly half on the same time the previous
year. Figures also show an increaser in total net lending to individuals in
February to £9.8bn, which was above the increase in January and the previous six
month average.

Liberal Democrat
Shadow Chancellor Vince Cable says: “It is becoming increasingly clear that the
downturn in the housing market is much more than just a blip. As the credit
crunch continues to restrict lending and with many people saddled with masses of
personal debt, a dramatic fall in mortgage approvals was
inevitable.”

He adds: “As house
prices continue to fall and mortgage costs rise, we are in real danger of
returning to the woes of the Tory recession with large numbers of families
suffering negative equity and repossession. The Government must act now to
prevent mass repossessions which will only worsen this housing
crash.”

Nationwide switches to SAP for Banking

The UK's Nationwide Building Society is migrating its banking, savings and mortgage operations to the SAP for Banking platform as part of a £300 million business transformation programme.

German vendor SAP says its technology will streamline core processes, reduce costs and improve turnaround and processing of applications and transactions.

The building society, working with technology partners Sap, IBM and Capgemini, will implement the technology in a phased programme, focusing initially on current accounts before moving on to savings, mortgages and branch systems.

The SAP platform will replace systems supplied by Unisys and Fujitsu. Darin Brumby, divisional director, business systems transformation, Nationwide, says Sap for Banking will provide the building society the flexibility to adapt and respond to unseen future changes and advancements in the industry.

"Not only will it enhance our speed to market with products, it will also improve the overall customer experience with the society while reducing costs," says Brumby. Thomas Balgheim, SVP, global banking line of business, SAP, adds: "SAP's banking specific solutions are built upon a flexible and scalable platform that provide the foundation for addressing the many challenges faced by financial services providers today, from increased competition and value adding customer services, to the demands of regulatory compliance and managing new growth opportunities."

The SAP deal is part of Nationwide's six year, £300 million, programme to revamp branches and improve Internet and telephone banking services, which began in 2004.

Small societies restrict lending

The turmoil in the financial markets has led several small building societies to restrict or even halt fresh mortgage lending.

The Bath and the Earl Shilton have withdrawn all their deals, except those at their standard variable rates. Three others - the Newbury, Melton Mowbray and the Tipton & Coseley - are only lending to local people.

All have been swamped by demand but have found funds hard to come by on the financial markets.

The Bath building society admitted it had temporarily run out of money to lend. "Wholesale money is difficult to get and we have come to a standstill at the moment," said a spokesman. "We are hoping it will just be for a month, but we have taken on so much [new business] we have just run out of money to lend at the moment."

The Tipton & Coseley said the fact it was still offering 95% mortgages meant it had been attracting interest from customers unable to obtain mortgages elsewhere. "We were getting a lot of calls from around the country and we wanted to make sure that people locally can get them," said the society's Chris Martin. "Lenders are withdrawing rates and increasing them and limiting the percentage they will lend on.

"We are a bit loath to do that and it is to make sure we don't have to that we are restricting borrowing to people in our area," he added.

he drying up of funds in the financial markets has already led to the crash of one of the country's biggest mortgage lenders, Northern Rock.

But the effects of the crisis are turning out to be more widespread. All lenders are now much more cautious about who they will lend to - both to their public customers and also to professional ones in the financial markets. That has led directly to the disappearance of mortgages worth more than 100% of a property's value. And some lenders are now reluctant to lend more than 90%.

The Council of Mortgage Lenders has already warned that the "mortgage tap" could be turned off this year. Lenders expected to fund a third of their lending by borrowing from other financial institutions on the financial markets, but this source of funds has now dried up.

The economics consultancy Capital Economics - which has long argued that the housing market in the UK was a bubble waiting to burst - warned that the drying up of funds might lead to a downward spiral of falling house prices this year.

Fixed rate mortgages 'are the key'

The Chancellor unveiled plans to persuade homebuyers to take out longer term fixed-rate mortgages and to help key workers on to the housing ladder.

Mr Darling thinks fixed rates lasting up to 25 years will bring stability to the housing market, and protect homeowners from the payment shock of seeing their interest rate suddenly shoot up.

He also launched two shared ownership schemes which would allow key workers such as nurses and teachers to pay for a mortgage, initially covering just half of the property value. They will be offered a low rate loan for the rest of the value until they can afford to buy a bigger share of their property. This is the latest version of a failed government scheme which helped only 451 people into new homes, at a cost of £350m.

However, this scheme will allow borrowers to shop around for the best deals, and should be simpler to arrange. In a further boost, these borrowers will not have to pay any stamp duty on their home until they own at least 80 per cent of it.

Normally buyers must pay 1% of the price on homes worth upwards of £125,000, 3% above £250,000, and 4% over £500,000. The Government is also desperate to encourage UK homeowners to take out longer-term fixed rates. Of the one million plus mortgages taken out in the UK last year, only three per cent were for fixed rates of ten years or longer.

This compares with around half of all mortgages taken out in the U.S. and France. The problem with the UK model is that when borrowers come to the end of their mortgage term payments can rise suddenly because interest rates have increased since they last took out a loan.

This is when homeowners can start falling behind with their monthly repayments and risk being repossessed. The Chancellor believes that if borrowers had fixed rates lasting ten, 20 and 25 years then families would have the security of knowing what their repayments would be.

Yesterday he set out proposals to encourage banks and building societies to pool data on how many borrowers repay their mortgages early and what charges they have to pay. He hopes that by looking at the example of long-term fixed rate mortgages in other countries the banks and building societies will be able to find a way to charge a smaller early repayment penalty.

British homeowners are not keen on long-term fixed rates because of the penalties for quitting.

BUDGET 2008

For example, a borrower with a long term fixed rate could pay an early repayment charge of as much as 7% of the amount they have left to repay - £9,100 on an average £130,000 mortgage.

David Hollingworth from brokers London & Country says: 'It is extremely difficult to plan for what is going to happen 25 years or even ten years down the line. Borrowers like the idea of long-term stability but don't want to be trapped for the long-term.'

Gravity packager software

The developer of packager software system Gravity is looking to set up a whole of market sourcing system to rival Mortgage Brain and Trigold.
Called Orbiter, it will offer sourcing, processing and online compliance services.

The system is being developed by software firm Oppono, creator of packager processing and sourcing system Gravity, which has been running for two years.

It plans to roll out a whole of market solution by the end of 2008, allowing it to offer what it calls a one-stop shop market proposition.

Bank of Scotland International selects BancTec Mortgage Origination solution

BancTec Ltd, a leading provider of transaction processing solutions to the banking and financial services marketplace today announced Bank of Scotland International has chosen its eFIRST Origin solution.

The BancTec solution, eFIRST Origin, will allow Bank of Scotland International to optimise the performance of its multi-currency mortgage application processing operations and significantly decrease the time it takes to process mortgage applications. The implementation of eFIRST Origin provides Bank of Scotland International with a fully integrated web-based solution that will manage applications for offshore mortgage products; from customer enquiry all the way to completion and drawdown.

James Gairdner, managing director, Bank of Scotland International said, "We look forward to working closely with BancTec to ensure customers continue to receive the high quality service they have come to expect from Bank of Scotland International."

James Silcock, business development director - EMEA at BancTec said, “We are pleased to have been selected by Bank of Scotland International to provide their next-generation mortgage system. This is the first time eFIRST Origin will be used within a multi-currency loans environment and we are looking forward to working closely with them to ensure all mortgage illustrations will be accurately generated, controlled and documented as part of Bank of Scotland International’s rigorous approach to compliance."

FSA fires out warning to advisers ahead of March TCF deadline

The FSA has sent out a warning to advisers ahead of its March Treating Customers Fairly deadline suggesting a third of firms have not got the correct systems in place to test TCF.

In its newsletter to financial advisers, sent out today, the FSA says between September and December 2007 it carried out visits to 50 adviser firms to review process for giving advice, including management information. A further 50 firms were mystery-shopped.

Although the visits are still being analysed, the FSA says around a third of firms were not actively analysing and using management information they had gathered to review their processes and test whether they were treating their customers fairly.

The newsletter says: “It was disappointing that, in spite of producing some form of MI including Key Performance Indicators, so many firms failed to consider these on an ongoing basis as part of their monitoring of advising practices. In addition many firms did not adequately consider findings from their review of customer files as part of their MI.”

The newsletter also highlights a recent review by the FSA into whether firms are doing enough to ensure appointed reps are treating their customers fairly.

It found a number of issues with the 35 firms who participated including firm’s own written procedures not being followed in practice, too much reliance placed on the remote checking of client files and poor progress with treating customers fairly.

The newsletter says: “Whilst the results for the financial adviser sample were somewhat better than the other sectors, there are over 1,300 ARs conducting business of behalf of small financial adviser firms. Firms need to ensure the ARs they recruit are fit and proper and that their customer facing staff have the necessary knowledge and competence to advise customers.”

Stroud & Swindon opens new contact centre

Stroud & Swindon
has officially opened its new contact centre in
Gloucestershire.

The contact centre
was officially opened by the Mayor of Gloucester Harjit Gill and the welcoming
speech was made by Stroud & Swindon chairman Laurence James. The contact
centre, which will initially house 40 Stroud & Swindon employees, has an
overall capacity of 110.

Fitted with state of
the art telephony systems, Stroud & Swindon claims the centre will offer an
even higher level of customer service.

Stroud & Swindon
contact centre manager Gina Pearce says: “We have been based in Gloucestershire
for over 150 years and it was imperative to us that our new offices remained in
the area, as opposed to moving elsewhere in the UK or even abroad as other
institutions have done.

“Stroud &
Swindon is a committed employer in the local community, and considers
Gloucestershire and the Southwest its heartland. The new contact centre not only
allows us to provide a better service to our customers, it also gives us room
for expansion.”

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Debt consolidation may be anti-TCF

Financial advisers
should think twice before suggesting consolidation to indebted clients, a debt
mangement advisor has warned. TCF Debt Solutions says that unless advisors
include alternatives to consolidation in their advice to clients with debt
problems, such as individual voluntary arrangements or wider debt management
solutions, they may fall foul of the Financial Services Authority's Treating
Customers Fairly regulations.

Andy Moody, chairman
of TCF Debt Solutions, says: “We need to move beyond a consolidation mentality
as advisers.

“Consolidation has
helped many customers but for a lot of clients it can be argued that taking on
more debt is just forestalling an inevitable move into greater problems that can
lead to bankruptcy."

He adds: "The
question will then be whether the intermediary assessed the client correctly at
the outset, and the FSA will expect to see that in keeping with treating
customers fairly the client was fully aware of all the
options.”

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Prime lending is dominant in UK, says IMLA

Prime lending continues to dominate the UK mortgage market, says the Intermediary Mortgage Lenders Association. Despite prevalent fears over sub-prime lending in the US and at home, IMLA says prime and self-cert residential lending remain the majority.

It says this applies to loans generated both via the intermediary sector and direct to consumer.

IMLA says it has collated estimates of 2007 mortgage volumes split between direct and intermediary business. Its research shows specialist lending represents 30% of all lending and that the intermediary sector handles more than 90% of specialist business.

Peter Williams, executive director of IMLA, says: “Specialist, intermediary lenders are often associated with sub-prime, buy-to-let and other forms of specialist lending. “But we mustn’t overlook the fact that significantly more prime business is handled through intermediaries than direct - £140bn for intermediaries compared with £115bn direct.” He adds: “Even so, non-conforming business does represent around 30% of the whole market and as much as 40% of intermediary business.”

Williams believes it is important to recognise that non-conforming lending is not all sub-prime.

IMLA’s research shows the market share of self-cert and sub-prime activity declined slightly last year, while equity release remained a very small proportion of the market at well under 1%.

The association says UK sub-prime lending represents 6% of the market, as opposed to 20% in the US. Williams adds: “Intermediaries handled in excess of £230 billion in 2007, according to our calculations.

“Even in a slower market, based on projections for the size of the market in 2008, they will still be looking at substantial levels of activity in the current year.”

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Peer calls on NR to abolish Together mortgage

A Liberal Democrat
peer has called on the chancellor to ban Northern Rock from offering its 125%
LTV Together mortgage.

In a debate in the
House of Lords, Lord Newby the Liberal Democrat spokesperson for the Treasury
called on Labour peer Bryan Davies, Baron Davies of Oldham to get the chancellor
to abolish the product.

Newby says: “Does
the minister agree that one category of loans doomed to fail from the start is
that where the loan value, from the outset, is significantly greater than the
value of the house?

"Will he therefore,
through the chancellor, instruct the current management of Northern Rock, to
stop offering its Together loan?” Lord Davies replied saying that Northern Rock
is a private company that takes private decisions.

He added:
“Government anxieties about Northern Rock are acute, and it will be important to
take action in the very near future.”

In the same debate
Labour peer Lord Borrie also called on Lord Davies to consider taking criminal
prosecution against those that offer loans to people that are unable to pay them
back.

Borrie says: “Loans
are being given that are doomed form the start because the individuals to whom
they are given have quite inadequate means to pay them back.

"In those most
serious cases, would not the power of deterrence be of great value by the wider
use of criminal prosecution, which could have a great meaning across the board
if some well-publicised cases were brought?”

But Davies responded
by saying that although it was aware of the dangers in this area, particularly
on the sell-and-rent back arrangements, it was tightening up its regulatory
regime of these types of products. A spokeswoman for NR says that it has no
plans to abolish its Together product.

She also disagrees
with the comments made by Lord Newby, adding that the product offers 30% as an
unsecured loan and it is only 95% that is secured against the
property.

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B&B boss confirmed as CML chairman

The Council of
Mortgage Lenders has appointed Steven Crawshaw, group chief executive of
Bradford & Bingley as chairman for 2008.

Crawshaw succeeds
Jon Pain, former managing director of Cheltenham & Gloucester.
Mark Parsons,
managing director of home finance at Barclays and Richard Brown, managing
director of personal lending at Bank of Ireland have been appointed deputy
chairmen. Crawshaw has held his role at B&B since March 2004, and began
his career as a litigation solicitor.

Since joining the
banking sector he has held positions at Cheltenham & Gloucester, Lloyds TSB
and B&B. Crawshaw says: “While the fallout from the liquidity crisis has
been well documented, let’s not forget the strengths of the UK mortgage
marketplace.

“The UK boasts a
competitive and innovative mortgage market which currently helps over 11.8
million households.”
He adds: “Looking
ahead, 2008 will be an uncertain year for the mortgage industry and lenders will
continue to respond to funding constraints. But it is entirely possible that the
market will recover sooner than expected.”

Crawshaw says one of
the CML’s main challenges for the year ahead will be making sense of the
aftermath of the 2007 events and ensuring policymakers and commentators are
accurately informed on the market environment as it evolves.

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First-time buyers face soaring mortgage costs

Average mortgage
costs to income for first-time buyers are now higher than levels at the 1990s
housing boom peak, says the Building Societies Association.

First-time buyers
were devoting nearly 35% of their income to mortgage costs by the third quarter
of 2007, compared with the previous high of nearly 34% in 1990, the UK Housing
Review indicates.

The Review by the
Chartered Institute of Housing and the BSA, published today, shows increasing
numbers of households are moving into private rented housing.

It says a
sharp rise in house prices and mortgage costs over the last decade contrasts
with the pattern of private rents, which have kept pace with earnings.

This has resulted in
substantially lower rents than mortgage costs.

The Review attributes
rapid growth in the private rented sector to competitiveness of private renting,
as opposed to owner-occupation and the greater choice available to households
seeking such housing.

Steve Wilcox, professor of housing policy at the
University of York and author of the review, says: "Private renting has become
far more competitive as an option for households compared to the cost of buying.

"The sector has
grown by 21% in the last five years across the UK and is fulfilling a
significant role in the housing market."

Adrian Coles,
director-general of the BSA, says: "With first-time buyers finding it
increasingly difficult to get a foot on the housing ladder, the private rented
sector is providing good quality accommodation to increasing numbers of people."

www.mortgagestrategy.co.uk

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Packagers start to woo traditional lenders

Many packagers are striving to get more balance sheet lenders on their panels to minimise the impact of the credit crunch on business.
Last week, Praxis Mortgages re-vealed that it was adding Scarborough Specialist Mortgages to its panel and it is hoping to add CHL Mortgages on October 8.
Dudley Aldous, director of sales and marketing at Praxis, says: "Traditional lenders with their own funding streams are bringing much-needed stability to the sub-prime market."
Steve Field, managing director of Niche Mortgage Solutions, says the packager is in discussions with balance sheet lenders and has recently added BM Solutions to its panel.
He adds: "Until recently, packagers were at a disadvantage if they didn't have a wide range of securitising lenders on their panel. But the power has shifted to balance sheet providers."
Packagers are continuing to struggle as the credit crunch continues to bite business volumes. Last week, John Rice, managing director of the Regulatory Alliance of Mortgage Packagers, said applications to packagers were down 35%. He also forecast redundancies of 20% to 30% in the weeks to come, with packagers' income falling by up to 60% by Christmas.
Consultant Brian Pitt adds: "Firms that have been scraping by on small margins and high overheads will sink. No more than 50 packagers will survive this credit crunch."

FSA to crack TCF whip in 2008

The Financial Services Authority is set in 2008 to grill all 3,800 mortgage brokers in a bid to speed up the take-up of its Treating Customers Fairly initiative.

The regulator is also looking to focus on failing firms that need the most attention and debunk the myth that smaller firms are below the FSA’s radar.

Across the financial services spectrum, the FSA will be conducting mini-assessments with a whopping 18,000 advisers. Out of these, it says 25% of these mini-assessments will be followed up by a full assessment.

Mandy Spink, head of mortgage and credit unions at the FSA, says: “As everyone knows, the March 2007 deadline didn’t do particularly well. Only 41% of advisers implemented TCF and this was actually only 22% when you looked at mortgage firms.

“This strategy is about increasing the amount of contact with small firms, helping brokers embed TCF and focus on those that need regulatory attention.”

The FSA will be undertaking a major recruitment drive to bolster staff levels so it can undertake the TCF review.

Spink adds: "This is also a way of myth busting that firms are not under our radar. We would like to be in a position in giving as much help as possible to those engaging with us so we can focus as much as our resources on those that are not

Moneyfacts and iE launch outsourced online account opening service

Financial
news and information Web site Moneyfacts has partnered with UK retail
banking software vendor Intelligent Environments (iE) to launch an
outsourced Internet savings applications service.

The
package is targeted at small financial services firms and building
societies that lack the resources and connectivity to sign up customers
online.

The service will be offered on rental terms, for a minimum contract period and with full hosting and implementation support.

Firms
will be charged for each application generated instead of paying a
licence fee which, says Moneyfacts, means low upfront investment and
running costs.

Moneyfacts also claims the service will
save companies money on know-your-customer checks because the
applications it generates will already be fully verified.

Stephen Rumbelow, head of Moneyfacts, says the cost of running branches is forcing institutions to focus on the Internet.

"Although
the products themselves are often market leading, shortcomings in the
application processes can see much of the product potential and
investment in product pricing go to waste through poor conversion
rates," he says.

Commenting on the move, Jerry Mulle,
director, sales and marketing, iE, says: "With Moneyfacts.co.uk we've a
'pay as you go' pricing model to offer a low cost start-up solution
that supports the business case for online financial services - reduced
cost of acquisition and reduced operational costs."

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Misys acquires Dresdner Kleinwort's primary loan book building platform

UK banking software vendor Misys says it has agreed to buy eLoancoordinator, an Internet-based book building platform for the primary loan market developed by Dresdner Kleinwort. Financial terms of the deal were not disclosed.
ELoancoordinator was launched by Dresdner Kleinwort in 2005 and now has over 4000 registered users.
Misys says the platform will be further developed by its treasury & capital markets team to create a new system, branded Misys LoanCoordinator.
Managed in real-time, the system will provide bookrunners, borrowers and investors with comprehensive pipeline information required to track, analyse and administer syndicated loans on a single online site, says Misys.
The product will be available as a stand alone system or as part of Misys' Loan IQ suite for syndication, agency servicing and secondary trading activities.
Ken Katz, global product manager, Misys Loan IQ, says: "Once the product is integrated with Misys Loan IQ, bookrunners and investors will benefit from seamless front-to-back offering giving them a view of all information on a particular loan that is needed throughout the entire loan lifecycle."
Current Dresdner Kleinwort users will be transferred to Misys over the next six months. The two firms have agreed that the bank will be the first subscriber to the new Misys LoanCoordinator.

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Acquisition of N4 Solutions

Experian, the global information solutions company, announces that it has acquired N4 Solutions, a UK-based mortgage sector and financial services software provider. The acquisition is a strong strategic fit with Experian's consumer credit activities and represents a natural extension to Experian's application processing capabilities.

Founded in 1999, N4 Solutions provides industry-leading software which helps mortgage providers to allocate the most appropriate mortgage to a customer, while helping financial services clients meet key compliance objectives. Its clients include large UK mortgage providers, such as Barclays, Nationwide and Portman.

Sales of N4 Solutions in the year to 31 March 2007 were £9m and gross assets as at 31 March 2007 were £2m, excluding cash. The company was purchased from its founders and will form part of Experian's Credit Services activities.

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Nationwide confirms broking arm details

Nationwide has announced further details on how its prime intermediary arm will operate following the planned merger with Portman Building Society on August 28.

The lender will be recruiting a substantial salesforce to commensurate with the size of the newly merged organisation. The team will report into a newly created position of head of sales for prime intermediary lending which has yet to be appointed.

Nationwide’s intermediary support team - currently based in Swindon - will be relocated to Portman’s headquarters in Bournemouth over a phased period.

Portman group development director Matthew Wyles will become executive director at Nationwide with responsibility for non-retail business.

Wyles says: "Intermediaries are at the centre of our vision for the future. Our new broker development sales force is a key element of a three year strategic development plan which will revolutionise Nationwide's systems and service delivery to the
intermediary mortgage market."

Divisional director of intermediary markets Peter Leydon adds: "This
announcement is tangible evidence of the Nationwide's absolute commitment to intermediaries. My management team and I will assemble, during the coming months, a substantial and highly effective sales force to support the thousands of firms up and down the country who want to do business with Nationwide."

Reporting directly to Leydon will be: Head of corporate development Joe Rabbitt who is currently head of intermediary development at Nationwide and head of support Peter Saint Ruth who is currently a senior manager within intermediary markets at Nationwide.

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Bristol and West to scrap exit fees from July 31

Bristol and West has confirmed it will also be scrapping exit fees for future customers from July 31.

This follows Cheltenham and Gloucester’s announcement last week that it will be axing its £225 exit charge on all future lending.

Lenders had a deadline of July 31 by the FSA to sort out their fee structure.

Bristol and West are now the second top 20 lender to announce they will no longer charge exit fees.

The decision will apply to mortgages on both Bank of Ireland and Bristol and West brands.

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NR overtakes Lloyds TSB in CML lender league table

Northern Rock has overtaken Lloyds TSB in the Council of Mortgage Lenders’ table of the largest lenders for 2006 by gross mortgage lending.

HBOS retains its iron grip in first position with £73.2bn worth of gross lending and a 21.2% estimated market share.

In second place is Abbey with £32.6bn worth of lending and a 9.4% market share.

Northern Rock has slipped into third place, overtaking Lloyds TSB, with £29bn of lending and an 8.4% market share.

Lloyds TSB, now ranks fourth largest with £27.6bn of lending and an 8% market share.

Nationwide came in fifth position with £21.1bn and a 6.1% share of the market.

Once it merges with Portman later this year, its combined gross mortgage lending will still total less than that of Lloyds TSB, at £26.1bn.

Royal Bank of Scotland follows close behind with £20bn of lending and a 5.8% market share.

Further down the ranks, HSBC has fallen from seventh place last year to ninth place, and now sits below Barclays and Alliance & Leicester with £12.4bn of gross lending and a 3.6% share of the market.

Barclays saw £18.4bn of lending, while Alliance & Leicester saw £12.6bn.

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GE rumoured to be under investigation by FSA

Leah Milner - 05-Jul-2007

By Leah Milner

GE Money Home Lending is rumoured to be the subject of a Financial Services Authority probe.

The
rumoured investigation into the sub-prime lender comes a day after the
FSA’s review of the sector revealed serious shortcomings.

The FSA revealed it was investigating five mortgage brokers following on from its review of the sub-prime sector.

A spokesman for GE Money says the lender is unwilling to comment on industry speculation.

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Offset

New research published today by the Council of Mortgage Lenders has
revealed strong growth in the number of people opting for an offset
mortgage. During 2006 170,000 offset mortgages were taken out, worth
£29.3 billion - equivalent to 7% of all new lending. And, the
year-on-year growth of offset mortgages between April 2006 and March
this year was 49% (by value) - compared to just 15% for non-offset
lending. Offset mortgages combine a mortgage and savings in one account

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Offset mortgages gain in popularity

New
research by the Council of Mortgage Lenders (CML) has revealed that
170,000 offset mortgages worth £23.9 billion, or 7% of all new lending,
were taken out last year. They grew 49% by value in the year to
end-March, compared with the previous year, while non-offset mortgages
grew just 15%. "Mortgage lenders are constantly developing new products
to meet the needs of borrowers, and the fact there are now 250 offset
products available in the market illustrates this," said CML
statistician Phoebe Zhang said. "Continued innovation by lenders will
help to increase consumer awareness of offset products and expand the
market potential for offsets in the future."

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N4 predicts broader outlook for AVM's

N4 Solutions has predicted that AVM technology will be much broader than just valuations providing brokers and lenders with opportunities for added value services.

Since launching AVM desktop valuations, N4 has been working on a number of developments which will see AVMs used in a much broader context including buy-to-let investment management tools for mortgage brokers, providing them with the same analysis tools as available to investment advisers, including portfolio management, capital appreciation and yield analysis.



N4 predicts that AVM technology will be utilised by anyone that has an interest in pricing either individual properties, such as end consumers and local authorities for personalised rates calculations, through to portfolio managers for more accurate securitisation modelling.



David Wiseman, consultancy director, N4 Solutions, says: “Much of the current debate is focused on the short term implication of AVMs, with little regard for what they could mean for the industry.



“We see a very real opportunity for brokers who specialise in buy-to-let to offer portfolio management facilities, which will not only create additional revenue, but guarantee a regular dialogue.



“The technology will be used in an even wider perspective and will increase the accuracy of everything from local property taxation to house price indices.”

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Oracle forms financial services software unit

Oracle is establishing a new business unit focused on developing applications for the financial services industry. The new division will be headed by Rajesh Hukku, the current chairman and managing director of its majority-owned i-flex solutions subsidiary.



Headquartered in New York the unit will centralise and coordinate Oracle's financial services software products and serve as a vehicle for future acquisitions.



The new unit will bring together i-flex's applications - including Flexcube, Reveleus, Mantas, DayBreak and Insure3 - with Oracle's product suite.



In a statement Charles Phillips, president of Oracle, says the formation of the unit "will enable the consolidation and integration of our growing portfolio of financial services applications to provide the comprehensive and best-in-class solutions that our financial services customers expect".



I-flex executives R Ravisankar - currently CEO for international operations - and Deepak Ghaisas - who is currently CEO for India operations and CFO - will join Hukku to form part of the unit's management team.



Hukku will head the new unit in addition to his i-flex oversight responsibilities and will continue on the vendor's board as non-executive chairman.



Ravisankar and Ghaisas will both join the i-flex board as vice chairmen.



I-flex says its COO NRK Raman has been named managing director and CEO, while Makarand Padalkar, currently chief of staff and head of investor relations, assumes the role of i-flex's CFO.



Finally, Derek Williams, EVP of Oracle, will also join the i-flex board.



I-flex says the management changes are designed to achieve better co-ordination with Oracle's strategy for financial services. "This is an integral step in i-flex's strategic roadmap to position ourselves better to capture the enormous opportunity in financial services by expanding our leadership team," says Hukku.



http://www.finextra.com

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Lehman to take on rivals with £4m marketing budget

Lehman Brothers looks set to take the intermediary market by storm over the coming months after it revealed it will be spending a whopping £4m on marketing to develop its multi-brand market strategy.



Ever since Guy Batchellor, former sales and marketing director at Platform, joined the helm of Lehman Mortgage Capital as executive director of sales and marketing alongside chief executive Simon Hinshelwood, broker anticipation has mounted over what the planned changes to the Lehman mortgage brands would entail. These include Capstone Mortgage Services, SPML, Preferred Mortgages and London Mortgage Company.



Now the recruitment process has started to bolster brand positioning with a marketing budget of £4m - at least double that of some high street names.

Lehman was advertising in yesterday's The Sunday Times for a head of sales for SPML, a director of marketing and a director of strategy and change.



The latter two positions are both City-based and offer a six-figure compensation package. SPML's head of sales will also be based in the City and is offering a competitive salary.



But it's the advertisement for a director of marketing that sheds light on the Lehman Mortgage Capital strategy.



The advert says: “You will work closely with internal and external contacts to establish key messages and execute strategic marketing campaigns, on time and within a circa £4m budget.”



It also says: "This newly-created role will allow you to develop and execute a winning multi-brand market strategy, ensuring the success of Lehmans' residential mortgage brands.”



And in a strong commitment to the packaging sector it adds: “You will… expand and maintain relationships with key packagers and other core customers.”



The director of strategy and change will report directly to Hinshelwood and “will have full responsibility for ensuring that the strategic vision and ambitious transformation objectives for Lehmans' residential mortgage brand are implemented and achieved".

Also responsible for delivering a five-year business plan it would appear acquisitions are also on the cards.



The advertisement adds: “You will be tasked with delivering benefits to customers and stakeholders, through implementing multi dimensional change projects including acquisitions, business integration, operational improvement and organizational change.”



Earlier this month Mortgage Strategy Online revealed that Lehman Brothers Mortgage Capital was to launch a direct-to-broker specialist lender at the beginning of 2008.



The new brand will provide a full range of specialist products, from sub-prime, self-cert and buy-to-let to prime self-cert and prime buy-to-let, but with a dedicated direct-to-broker distribution and is designed to sidestep accusations of a direct proposition conflicting with products offered to its packager partners.



One recent entrant to the lending market, who asked not to be named, says: "This is big money. This will give Lehman blanket coverage across the trade press. It will be interesting to see how that £4m is allocated across the three and now four brands but you can guarantee that over the coming six to 12 months Lehman will be a force to be reckoned with."



http://www.mortgagestrategy.co.uk

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