FSA appoints senior adviser on mutuals
Sutherland has more than 36 years experience in the retail banking sector, holding several senior positions at Nationwide, including director of sales and marketing.
In 2009, Sutherland was a special adviser to the Bank of England’s special Resolution Unit and, last year, was appointed chief executive of Stroud & Swindon Building Society during its merger with Coventry Building Society.
Hector Sants, chief executive of the FSA, said: “John brings to his role considerable experience of the retail banking sector which will be vital in our work in this area.
“Senior advisors are a core part of the FSA’s delivery of intensive supervision. The team provides experience on regulatory, market and consumer matters.”
Coventry profits leap 44%
In a record breaking year for the building society, its gross mortgage lending increased to £3.5bn in 2010 from £2.7bn in 2009.
It said this gave it is highest ever market share, accounting for 17.1% of all mortgage advances made by building societies and mutual lenders.
In addition, excluded balances acquired through its merger with Stroud & Swindon, Coventry’s net mortgage lending was £1.6bn in 2010, up from £0.9bn the previous year.
According to CML figures, this accounted for 19% of all net mortgage lending in the UK.
The mutual’s mortgage assets increased £1.9bn following its merger with Stroud & Swindon in September last year.
Including former Stroud & Swindon mortgages, 0.82% of mortgage balances were 2.5% or more in arrears, down from 0.93% in 2009.
The Coventry’s operating profit before impairments rose to £85m last year, up from £75m in 2009, while underlying profit before tax increased 27% to £75.3m.
David Stewart, chief executive of Coventry Building Society, said: “I am pleased to report that Coventry has again recorded a very strong performance, a track record that has been largely unaffected by the onset of the financial crisis in 2007.
“We are again grateful for the support received from all types of mortgage advisors. This support has been instrumental in helping us achieve a record market share.”
MS One-to-One with Coventry Building Society’s Colin Franklin
Coventry Building Society has proved its strength throughout the economic crisis. We find out if Datamonitor’s suggestion that building societies are being squeezed out by the banks has weight, what the future is for interest-only mortgages and why the lender-broker relationship needs to be stronger.
Coventry BS finalises merger with Stroud & Swindon
The expanded society will be called Coventry Building Society and will be based in Coventry.
Total membership will increase from over 1.2m to around 1.5m and the overall asset size will increase from £18.4bn to £21.1bn.
Coventry expects a third of about 250,000 savings accounts will see improved interest rates on completion of the merger, to match equivalent products it offers.
It adds borrowers currently paying or linked to Stroud & Swindon’s residential Standard Variable Rate (SVR) of 5.99% will benefit from a cut in their mortgage payments as they move onto Coventry’s lower SVR of 4.74%.
David Stewart, chief executive of Coventry Building Society, said: “Coventry’s performance over the last three years has demonstrated the strength of our traditional building society model.
“I believe the merger with Stroud & Swindon will help us build on recent successes and bring the benefits of our prudent and member-focused approach to a wider membership.”
Coventry achieves record market share as profits jump 20%
Underlying profit before tax for the first six months of the year was up 40% to £46.5m.
The mutual’s results showed it achieved record market share, with net mortgage lending reaching £751m for H1 2010, equivalent to 31% of all net mortgage lending in the UK.
In addition, the Coventry’s gross mortgage advances amounted to £1.6bn or 18% of all mortgage advances by the building societies and mutuals sector.
It put down the rise in its market share to the number of lenders that have been forced to withdraw capacity from the market.
The average LTV ratio on advances made in the H1 2010 was 54%, while its mortgage assets have increased by 6% during the first half year, a rate of growth broadly in line with the Coventry’s long-term performance over the past ten years.
The Coventry’s prudent approach to lending has maintained the quality of its mortgage book, with just 0.79% of mortgage balances 2.5% or more in arrears, slightly down on the end of 2009.
David Stewart, chief executive of Coventry Building Society, said: “We have remained very much open for business, lending at modest loan-to-value ratios and to low risk borrowers.
“The increase in margins available for new mortgages means that our ability to continue to lend has helped support profitability.”
The society’s growth in mortgages has been funded by a large increase in savings balances, which rose by £1.7bn (13%) during the first half of the year.
The reported figures for Coventry Building Society do not include the forthcoming increase in mortgage and savings balances when it completes its merger with Stroud & Swindon on 1 September.
It has announced that Stroud & Swindon’s intermediary brand ITL Mortgages will close to new business as of that date.
Stewart said: “The impact of forthcoming regulatory changes, including those affecting capital and liquidity, will no doubt bring new challenges, whilst we must remain alert to the possibility of a significant deterioration in the housing market and the wider economy.
“Nevertheless, prevailing market conditions continue to help our competitive position. The society’s performance is strong and we retain the flexibility to adjust margins should the operating environment deteriorate.”
Coventry set to close In the Loop following S&S merger
Linda Will, sales and marketing director, Stroud and Swindon, and ex-boss at Accord Mortgages will be leaving the society on 31 August 2010.
From this date, all new intermediary mortgage applications will go through Coventry Intermediaries via its two brands – Coventry Building Society and Godiva Mortgages.
ITL Mortgages will continue to serve brokers who have customers with existing ITL mortgages.
Colin Franklin, sales and marketing director of Coventry Building Society and managing director of Godiva Mortgages, said: “Brokers need clarity from a lender as well as competitive products and award-winning service, and by making this announcement now we want brokers to know what to expect on 1 September.”
“Streamlining our brands also helps provide this clarity to brokers and their clients. Coventry Intermediaries has a trusted reputation for providing the most intermediary-friendly experience possible. We remain absolutely committed to our pledges, which includes no dual pricing.”
Coventry Intermediaries also launched a leading range of first time buyer and residential mortgages through its two brands, Coventry Building Society and Godiva Mortgages.
Godiva Mortgages is launching two residential mortgages, including a 2.75% Flexx For Term offered up to 50% LTV and a 2.99% 2 Year fixed rate to the same 50% LTV.
The range also includes reduced rates from Coventry Building Society on two first time buyer mortgage deals. The reduced rate of 5.85% for two years is available up to 85% and 90% LTV.
To qualify for the member’s first time buyer’s mortgage the applicant or applicant’s parents, grandparents or guardian must have held a savings or mortgage account with the Coventry for at least three years.
The MS One to One with Coventry Building Society’s Darin Landon
How are operations changing as the merger gets underway?
Darin Landon: It is business as usual and everyone’s on target for full-integration of the lending arms under the Coventry Intermediaries banner by late 2011. We have announced some new products, including two new best buy products from Godiva Mortgages. These are a 2 year fix at 2.99% and a 2 year flex for term loans at 2.75%, with no tie-ins, which should both do well. Both are offered up to 50% LTV with application fees of £800 and a £199 booking fee and should attract volume business.
How do you plan to integrate In the Loop, Stroud and Swindon’s intermediary lending arm, and Coventry’s specialist arm Godiva Mortgages?
DL: Coventry Intermediaries is a well-proven proposition and we want to build on that. So, we will continue to service all existing customers under their existing brand but we will be using Coventry Intermediaries to acquire new mortgage business from 1 September.
We will have two brands – Godiva and Coventry Intermediaries – rather than three from September and In The Loop won’t take on any new business.
Coventry Intermediaries is the name of our intermediary arm which includes two brands – Coventry Building Society and Godiva Mortgages.
Godiva and Coventry are managed separately from each other but share SVRs and privileged rates. We will be able to vary the products by fees, LTV, initial period, interest rate type etc. so the key for us it that it allows greater flexibility in our approach to the market. The service proposition will be exactly the same.
Coventry has a strong record for intermediaries, including a promise it will not have dual price. Are you still offering those commitments?
DL: We have a strong reputation for being broker-friendly and there will be no change to that because want to assist brokers. We have ambitions and intermediaries are key to our growth plans and that relationship has always stood us in good stead.
Coventry will no longer lend interest-only loans to first-time buyers. Why?
DL: We made a separate announcement on this recently and as a responsible lender, we want brokers to make sure borrowers can afford to repay their loans. Other lenders have done the same and it is a matter of keeping an eye on it.
Coventry Intermediaries’ pledges to the broker market:
- No overhanging ERCs
- No differential pricing between channels
- All products available to existing customers
- All direct mortgage products available to intermediaries
- No cross-selling to your clients
- At least two working days’ notice of product withdrawal
FSA nods through Coventry Stroud & Swindon merger
Copies of the FSA’s written decision are available on the FSA website.
Copies of the decision will be sent to each society and to those who made representations.
Coventry merges with Stroud & Swindon
The expanded society, which will be called Coventry Building Society, will be based in Coventry. The responsibilities of Stroud & Swindon’s head office will be transferred to Coventry over the next 18 months.
The enlarged society will have a network of 91 branches and agencies. No branches or agencies will be closed as a result of the merger and all Stroud & Swindon branch staff will be retained. There will be no change to In the Loop Mortgages, the intermediary arm of Stroud & Swindon.
Total membership of the new society will increase from over 1.2 million to around 1.5 million, and the overall asset size will increase from £18.4bn to £21.1bn.
Approximately two thirds of Stroud & Swindon’s 251,000 savings accounts will see interest rates improved on completion of the merger to match equivalent products offered by Coventry.
Stroud & Swindon traditional residential mortgage customers who are currently paying, or are linked to, its residential Standard Variable Rate (SVR) of 5.99% will move to Coventry’s lower SVR of 4.74%.
John Sutherland, chief executive of Stroud & Swindon Building Society, said: “In considering a number of options, we believe that Coventry Building Society’s commitment to long term member value, fairness, strategic prudence and local communities, provides Stroud & Swindon members with the best possible future.”
Coventry had assets of £18.4bn at 31 December 2009 and Stroud & Swindon had assets of over £2.7 bn.
Stroud & Swindon Building Society will be asked to vote on the proposed merger on 16 June 2010.
The merger is expected to be effective on 1 September 2010 and is subject to FSA confirmation.
Unbiased: lenders compete for first-timers
In its latest Mortgage Advice Drivers report, the advice website revealed that first-time buyers are continuing to seek brokers in high numbers.
They made up 42% of all mortgage advice enquiries in February on Unbiased, which was slightly down from 43% in January but up from 41% in June 2009.
Karen Barrett, chief executive of Unbiased, said first-time buyers are trying to access the market as lenders re-introduce competitive mortgage rates on high LTV products.
She added: “Lenders now have a renewed appetite to compete at the bottom end of the market.
Hopefully more will follow, in which case 2010 could turn out to be the year of the first-time buyer.”
Linda Will, sales and marketing director at Stroud & Swindon Building Society, said she was unconvinced that the enquiries would filter through to purchases.
She added: “The products are still too expensive for most potential buyers. The fees are too high and raising a deposit is still challenging.”