BoI to review lending in UK as property market shrinks
Bank of Ireland employs about 3,600 people across three business lines in the UK
Wednesday November 12 2008
Bank of Ireland is understood to be reviewing its continued lending in the UK mortgage market -- where it has a £27.5bn (€33.8bn) loan book -- that could result in job cuts there.
The review, which is believed to be at an early stage, comes as Britain's second-biggest mortgage lender Nationwide warned this week that the country's mortgage market will contract 80pc this year. It said house prices will have fallen about 25pc from their peak before the market stabilises in 2010.
Mortgage book
Analysts estimate that about 30pc of Bank of Ireland's UK mortgage book is to buy-to-let (BTL) investors and almost 20pc to "self certified" borrowers -- segments of the market where bad loans are ratcheting up in recent times.
At the end of August, some 0.5pc of its standard UK mortgage book was in arrears, rising to 0.72pc in the BTL book and 1.6pc of self-certified loans.
The bank's loan performance has fared much better, however, than the industry average so far in the downturn.
UK Council of Mortgage Lenders statistics for June showed that 1.33pc of all UK mortgages and 1.1pc of BTL mortgages were in arrears.
Bank of Ireland employs about 3,600 people across three business lines in the UK -- business banking, mortgages and its Post Office joint venture.
The group, which is due to unveil interim figures tomorrow, declined to comment.
The bank said in September that UK lending had slowed in that quarter as it adopted a "more selective approach to new business in a weakening UK economy and in order to achieve our capital in funding targets".
Last month, Irish Life & Permanent said it was letting a further 70 workers go in its specialist UK BTL mortgage business, having made the decision not to take on new business next year as turmoil in the property market continues.
New business
The group's UK business, Capital Home Loans (CHL), stopped writing new business earlier this year and shed an initial 50 positions.
The latest round of redundancies, aimed at reducing the lender's workforce to below 100 people, are mainly concentrated in its marketing and sales division.
- Joe Brennan
