Lending goes ex-growth
Tesco Bank seeks sale of £3.7bn mortgage business
Limited growth has prompted Tesco to seek a buyer for its mortgage portfolio
Tesco Bank has announced that it is pulling out of the mortgage business and is looking to sell its existing portfolio of home loans.
This will include the complete transfer of related balances and ongoing administration of relevant accounts. The Edniburgh-based bank, which has offered mortgages since 2012, currently serves over 23,000 customers with total lending balances of £3.7bn.
Gerry Mallon, who succeeded Benny Higgins as chief executive earlier this year, said: “In recent years, challenging market conditions have limited profitable growth opportunities. Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term.
“To that end, we have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer. We have therefore chosen to cease lending to new customers and announce our intention to explore a sale of our portfolio. Our priority in any sale, is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well”.
The company said there is no certainty that any transaction will result from Tesco Bank’s exploration of options to sell its existing mortgage portfolio, nor as to the terms on which it might be transacted.
“A further announcement will be made in due course should this be required at the relevant time. Until such time, the sale process remains confidential. If a transaction is confirmed, Tesco Bank will notify existing customers to explain what the sale means for their account.
“There are no changes to customer accounts as a result of this announcement and customers do not need to take any action”
Nationwide profits fall
Nationwide has reported a fall in annual profit to £833 million from £977m the previous year.
The latest figure includes a charge of £227m for writing down the value of assets and additional spending on technology.
“We expect demand in the housing market to remain fairly subdued, close to recent levels, before strengthening once the wider economy gains momentum.
“Deposit growth is likely to rise by around 4% per year, a little stronger than that recorded over the past two years,” the company said