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Lenders question B&B motive

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  • 01/04/2000
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Some mortgage lenders have yet to be convinced of the motives behind Bradford & Bingley's acquisitio...

Some mortgage lenders have yet to be convinced of the motives behind Bradford & Bingley’s acquisition of John Charcol.

Last month the building society acquired the broker from Warburg Pincus for £100m as part of an attempt to attract a premium rating when it floats later this year.

Christopher Rodriguez, the society’s chief executive, said: “This acquisition of the UK’s leading mortgage broker will enable us to almost double our mortgage origination volumes from 2000, giving us an estimated market share of nearly 5%.”

But Walter Avrili, technical director of John Charcol, said that some lenders had yet to be convinced of B&B’s motives and that Charcol would retain its independence.

He said: “Most of our lending partners do not have a problem with this and view it as a good thing as our distribution will be doubled. But there are those who are nervous about what may happen in the future. When we get around to explaining to them exactly what the rationale is behind the B&B acquisition, I am sure they will not have such an issue with it.”

The rationale, he added, was the increased distribution power that Charcol brings to B&B, coupled with its long-standing ability to negotiate good mortgage terms with its panel of lenders.

“The rationale was to gain origination power and to get distribution of mortgage money from an independent IFA source,” Avrili said.

Although John Charcol will retain its status as an independent subsidiary, there is still a question hanging over whether or not cross-marketing initiatives with B&B will be introduced.

For instance, the society has one of the largest chains of corporate estate agencies in the UK. One scenario being mooted is that the network could cross-advertise with the mortgage broker.

But Avrili said: “This is still all new, so nothing has been decided yet. The two e-commerce divisions are talking about whether or not there are crossover opportunities we can capitalise on or whether things stay the same.

“Currently there is no advertising on our website and we want to keep it as clean as possible. I cannot really see the rationale of people going to Charcol online if they want to buy a house. But plans will become a lot clearer in the next three to four weeks.”

Bradford & Bingley is likely to follow its purchase of John Charcol with a joint venture deal to outsource its mortgage processing, similar to the Woolwich deal with Countrywide in the US.

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