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Butterfield Bank’s move to continue UK lending in face of closure welcomed

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  • 19/02/2016
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Butterfield Bank’s move to continue UK lending in face of closure welcomed
High-net worth mortgage brokers have welcomed Butterfield Private Bank’s decision to continue lending in the UK despite winding down its deposit taking and investment management businesses.

The decision was announced on the Bermuda Stock Exchange by its parent the Bank of N.T. Butterfield & Son Limited.

In its statement the group said: “The scale and scope of the deposit taking and investment management businesses in London were not consistent with Butterfield Group’s growth strategy.

“Butterfield Private Bank is fully funded to return all investments and cash balances to clients and has worked with its regulators to formulate a plan for doing so in an efficient and orderly way.”

Ian Gray, senior partner at Kinnison, (pictured) said that while it was worrying on the surface to see a bank pull back from the market, he understood that Butterfield was well-capitalised and keen to continue supporting the UK mortgage market.

Gray said the closure of the other businesses meant he could offer his clients mortgages with Butterfield without the requirement for them to invest money with the bank.

“It’s great news that Butterfield will continue to lend,” he said. “It has traditionally been quite flexible on its underwriting of high-net worth clients. One thing they can do, which most private banks do not, is to lend with a margin over the Bank of England Base Rate rather than LIBOR, or an internally-defined base rate.

“This makes clients more comfortable, because LIBOR is a market-driven rate, whereas people feel they can take a clearer view on where they think Bank base is going in the next few years.”

Butterfield’s use of lending directors, who liaise between the client, private banker and the credit committee was raised as another reason it was highly regarded in the mortgage market.

“They always meet the clients which makes a big difference to the quality of their credit proposals,” added Gray.

“This isn’t the case with some other private banks. I’ve always felt their lending directors added a lot to the whole deal.”

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