Bridging Finance News

Troubled subprime lender £2.8bn in debt prepares restructuring deal

October 29th, 2010

In an Interim Management Statement released on Friday, the troubled subprime lender Cattles announced that it is getting ready to cut its losses in relation to its Welcome Financial Services division.

As part of a restructuring deal, Cattles has confirmed that it would compromise its subordinated inter company claims against Welcome Financial Services Limited, and other subsidiaries in the Group, for no less than £39 million in the event of a sale to a new company.

Cattles has said it would use the £39 million payment to meet its own costs and to compromise amounts it owes to its creditors – which is expected to be around £2.8 billion, according to the last audited balance sheet date of 31 December 2008.

However, the troubled lender admitted that a number of commercial, legal and regulatory issues still need to be resolved before any restructuring can be finalised.

The group warned shareholders that it would be reporting a ‘significant loss’ for the year ended 31 December 2009, and a negative value for shareholders’ funds.

The statement said: “Cattles continues to believe that its financial creditors are likely to suffer an aggregate loss of around £1 billion. Consequently, as previously stated on a number of occasions, Cattles continues to believe that the shares have little or no value.”

Last year, shares in the lender were suspended after an accounting error revealed an £850 million black hole in the company’s finances.

When the accounting error came to light, seven former executives were dismissed, whilst nearly 600 members of staff have been made redundant.

Cattles has stopped any further lending by Welcome Finance, and is using The Lewis Group to collect out the loan book, which is predicted to take at least two or three years. So far, in the first nine months of 2010, £396.6 million has been collected.

Mortgage bridging by Masthaven

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The ‘Cheese Grater’ and Walkie Talkie set to transform London skyline

October 29th, 2010

The plan to transform London’s skyline is underway, as one of the UK’s major property developers announces its intention to develop the Leadenhall Building in the city of London.

Dubbed by less admiring critics as ‘the cheese grater’, the 47-storey skyscraper will climb 736 ft (224 m) tall, with developers British Land hoping it will be “one of the tallest and most iconic buildings in the City of London”.

The total development cost is expected to reach around £340 million.

British Land announced on Monday that it has agreed heads and terms with Oxford Properties – the real estate arm of the OMERS Worldwide Group of Companies – to develop the Leadenhall Building on a 50:50 joint venture basis.

Detailed planning consent is in place and demolition and preliminary basement works have already been completed.

On site construction will start immediately following the construction tender process, which will commence in January 2011. Practical completion to shell and core is expected in 2014.

The spike-shaped building will boast 21,000 sq ft at the base, and decrease to 6,000 sq ft at the top – encouraging its cheese grater nickname.

The news comes just days after another property giant, Land Securities, announced its plans to form a partnership with the Canary Wharf Group (CWG) and build new skyscraper, the ‘Walkie Talkie’.

The news of the Walkie Talkie first broke earlier this year. Industry figures have speculated that these announcements, issued within days of each other, mark a new era for commercial property and the path to a slow but certain recovery.

Both buildings are planned for completion by 2014, and as yet neither has confirmed tenants. British Land currently stands as the UK’s second largest landlord.

Property development loans are available from Masthaven

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Estate agents worse for rip-offs than used car salesmen

October 29th, 2010

In a shocking study released by the European Commission it was revealed that estate agents come second to bottom in being the biggest rip-offs in Britain and across Europe.

According to the autumn 2010 Consumer Markets Scoreboard, a market monitoring survey – in both the UK and throughout the EU – estate agents come just in front of financial investments and behind used cars in terms of value for money.

The purpose of the survey is to identify markets that consumers believe are underperforming, with categories including satisfaction, experience of problems and customer expectations and trust – all of which estate agents were ranked poorly in.

John Dalli, EU commissioner in charge of health and consumer policy said: “The great promise of the Single Market is what it can deliver for consumers in terms of lower prices, greater choice, transparency and satisfaction. Thanks to the Scoreboard we can pinpoint the markets where this does not seem to be happening.”

For the first time in 2010, the survey provided data for 50 consumer markets, accounting for over 60% of the consumer household budget, in all 27 EU member states. It based its research among 500 consumers in those countries – all who have recent purchasing experience in each market.

Impressing many consumers across Europe were food and drink, whilst funeral services also scored highly. But other markets with consistently low scores were investments, ‘real estate services’, used cars, internet provision, and railways.

Estate agents were ranked bottom in other European countries including the Czech Republic, France, Luxembourg, Latvia and Slovenia. Despite some low scoring markets, the UK received a higher overall EU ranking due to customer’s satisfaction with credit and mortgage services.

The next step for the European Commission is to launch in-depth investigations into the market areas where the most problems were found across the board and indentify policy areas for improvement.

Mortgage bridging by Masthaven

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ASA bans controversial ad for short term loans company

October 22nd, 2010

By Shelley DeBere

A complaint made against a short-term loan company for sending out an unsolicited SMS advert has been upheld by the Advertising Standards Agency (ASA).

The company, Mason Chase, which has been trading as AdvMoney.co.uk (Mason Chase), has been accused of breaching the Committee of Advertising Practice (CAP) code on several grounds.

The complainant contacted the ASA after receiving a text message from the money lender, implying they had applied for a loan and it was ready to be deposited into their account. This was not the case.

The ASA stated that the unsolicited ad, which the complainant had already opted out of receiving from the company, ‘irresponsibly promotes credit services.’

From search engine results, it seems that Mason Chase is the umbrella title for a number of short term loan companies, such as purplepaydayloans.com and 247cashline.com.

When the ASA made attempts to contact Mason Chase they were unsuccessful, with the ad watchdog saying that this is of ‘considerable concern’ to the ASA and a breach of the CAP code, which insists that when an enquiry is made, a company should respond to it as soon as possible.

Additionally, the ASA accused Mason Chase of not keeping their databases up-to-date, another breach of the CAP code.

The ASA has now insisted that Mason Chase does not send the message out in the form it was received by the complainant, ruling that they must make sure that the recipients have consented to receiving such messages before they do so again.

Masthaven is a reputable provider of short term finance

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Consumers warned over rise in new payday lenders

October 22nd, 2010

With recent research anticipating that payday loans borrowing is set to triple in the next five years, potentially bringing new lenders in to the market place, an industry expert has warned consumers to take care when choosing their payday loan lender.

With interest headline rates up to 2,700% APR, payday loan providers are often blasted for charging extortionate rates.

However Gary Miller-Cheevers, CEO of payday lender speed-e-loans, has suggested that this figure can be deceiving as most payday loans last for a few weeks rather than a full year.

He has said: “APR for payday loans is a bit like Tesco’s pricing sausages by the ton.”

Figures from Datamonitor show that £1.2 billion was borrowed last year through payday loans, with analysts reckoning that these figures will soar to between £2.7 billion and £3.5 billion a year by 2014.

Mr. Miller-Cheevers, has warned that with new lenders coming in to the market place, all customers should be wary of whom they apply to.

“With increased competition comes choice – which is a good thing,” he said. “However, at the same time, cash-strapped consumers should very carefully look at who they’ll be doing business with.”

Research from speed-e-loans has revealed that 50% of its customers are white collar workers and professionals, including Accountants and Financial Advisers – ironically, people who traditionally take care of other people’s money for a living.

Short term loans and bridging finance

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FSA loses 41 laptops and Blackberries in three years

October 22nd, 2010

A regular criticism from the FSA when it comes to issuing bans on financial advisors is that they failed to demonstrate being ‘a fit and proper person’… the regulator might want to discuss these attributes with its workers, who have lost 41 laptops and Blackberries in the last year.

All of these are thought to have contained secure documents and emails.

The number of lost laptops and devices came to light after a Freedom of Information request from news site, New Model Advisor.

Ironically, the regulator has issued some of its largest bans on financial institutions who have failed to provide adequate data security.

Only in August of this year, the FSA fined the UK branch of Zurich Insurance Plc £2,275,000 for failing to have adequate systems and controls in place to prevent the loss of customers’ confidential information.

The fine is the highest levied to date on a single firm for data security failings.

In this year alone 10 laptops, seven Blackberries and two USB memory sticks were reported lost or stolen. In 2009 eight laptops and 10 Blackberries were mislaid, whilst just two laptops and two Blackberries disappeared in 2008.

Although all its laptops and memory sticks are encrypted, and its Blackberry handsets password protected, the FSA took action last year, disciplining 150 staff for risking the loss of confidential information.

The financial watchdog has reportedly said that it blocked further access to secure information by remotely disabling the hardware.

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LSL acquires Pink Home Loans to make network giant

October 22nd, 2010

Yesterday saw the announcement that LSL Property Services has agreed to acquire Pink Home Loans for £1.59 million.

Pink, which is made up of the mortgage distribution company, Advance Mortgage Funding Limited, and its subsidiary business BDS Mortgage Group Limited, has been bought from Skipton Building Society, subject to approval from the FSA.

LSL is acquiring the entire share capital in AMF for a purchase price of £1.59 million, which LSL has said it is funding from existing banking facilities.

It has been confirmed that Pink will be run independently from LSL’s other financial services businesses and will operate as a standalone network; it will report into the LSL Executive Team but will retain its existing management team, which will continue to be run under David Copland’s leadership.

The move is said to mark a ‘natural progression’ for Pink, which is ready to build on its market position.

For Skipton, the sale is part of a ‘continued re-focusing on core customer activities’, announced earlier this year.

Pink’s new partnership with LSL is tipped to make a splash in the intermediary sphere, as one of the largest intermediary networks in the UK focusing on mortgage and protection advice.

LSL has emphasised that it is a strong, well capitalised group with a £75 million acquisition facility which made half year profits before tax of £19.7 million.

It added that it is one of the few companies to make a strong profit throughout the past three years, and has continued to grow both organically and through acquisition.

With the acquisition of Pink Home Loans, LSL will now have over 1,000 AR advisers across the group, including First Complete, and more than 300 advisers in Linear Financial Solutions and across its estate agencies Your Move and Reeds Rains.

This acquisition also includes the Pink Mortgage Club and Pink ClubVIP, which have over 5,000 Directly Authorised intermediary members.

Simon Embley, chief executive of LSL said that Pink Homeloans would add significantly to its distribution agency. He added: “We fundamentally believe that a company can only survive and be profitable with scale in the current market.

“With Pink included in the Group, LSL is well positioned to drive value for our shareholders, our broker and lender partners and their customers.”

David Copland, managing director of Pink Home Loans, added: “In this new business and regulatory climate, scale is a vital component in the success of distribution businesses like ours – something Pink has been developing over the past three years with its organic growth and the acquisition of BDS.

“It is testament to the quality of our appointed representatives and our staff that LSL have acquired the business. This new relationship with LSL further enhances our capability and we are looking forward to the exciting new opportunities it represents.”

David Cutter, Skipton Group chief executive, said: “This marks the start of an exciting new era for everyone at Pink and the deal signals positive opportunities for both businesses. Our partnership has spanned over a decade and during that time, Pink has become an award winning mortgage distribution company. LSL is the ideal partner to help take Pink to the next stage of its development.”

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Middle class repossessions set to spike as child benefits cut

October 18th, 2010

A leading repossession lawyer has warned that the removal of child benefits for those earning over £44,000 may increase repossessions, as many middle class families find their debt problems spiralling and financial situations increasingly squeezed.

Moore Blatch warns that many of the affected families have very serious borrowing issues, often having ‘maxed out’ on both secured and unsecured credit facilities.

The result is that child benefit may be all that is keeping some families afloat financially.

For example, a family with a household income of £45,000, two children under the age of 16 and a stay-at-home partner could be over £1,700 worse off per year. That is equivalent to a loss of gross earnings of over £2,900 (6.5% of total income).

If this is considered in terms of mortgage commitments it represents three months’ payments, assuming a mortgage of £140k at 5%.

Paul Walshe, partner and head of lender services, Moore Blatch, said: “I fully appreciate the Government’s position with regards to cutting costs and, on the face of it, cutting child benefit for the better off is eminently sensible.

“However, whilst it is easy to assume that households on that level of income can absorb this level of cut back without having any profound consequences, the reality that we see from our cases, is that many of the families that will be affected are running a financial tightrope, and the only thing keeping them out of possession is the low interest rates and access to benefits.

“Public sector employees are rightly concerned about pay freezes eroding their disposable income by the rate of inflation but the cut will be much deeper for many middle-class families who will lose their child benefit unless the government compensates those families with stay at home parents in other ways.”

Short term loans and bridging finance

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Beatles star’s infamous Mull of Kintyre estate up for sale

October 18th, 2010

A Scottish country estate, forever immortalised in rock and roll history after Beatles and Wings star Sir Paul McCartney wrote a hit song in its tribute, has been put on sale for £2.95 million.

The sprawling 7,360-acre Carskey Estate, situated in south western Scotland on the Kintyre Peninsula, includes a nine bedroom Edwardian house and nine miles of coastline.

The estate became the subject of the 1977 Christmas Number 1, Mull of Kintyre which went on to sell 2 million copies in the UK and 6 million worldwide.

McCartney and his fellow Wings band mates had been staying in the area rehearsing when McCartney became so enamoured with the area that he wrote the song.

The singer once said of its lyrics: ”I certainly loved Scotland enough, so I came up with a song about where we were living; an area called Mull of Kintyre. It was a love song really, about how I enjoyed being there and imagining I was travelling away and wanting to get back there.”

The Estate was home to the MacNeills of Carskey from the early 1600s, until it was bought and renovated in the early 19th Century.

However, the home has been left relatively untouched since, and the current owners have now put it on sale with estate agents Strutt & Parker.

Andrew Smith, a partner at Strutt & Parker, says: “Carskiey is a magical place where you can truly get away from the stress and strains of everyday life and enjoy the stunning scenery that the Mull of Kintyre offers.”

The estate includes an Edwardian equivalent to a spa; a hydropathic bathroom with special hoses for fresh water and sea water, though sadly it no longer works.

As well as the main house’s nine bedrooms, there are nine estate houses and cottages, all of which are in varying states of repair.

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Middle-aged couples urged to prepare for retirement to stay debt free

October 18th, 2010

Couples who fail to make pension arrangements if their partner dies face falling into debt when they retire.

A study carried out by Prudential revealed that 52 per cent of adults who are over 40 and not yet retired risk losing pension income if their partner passes away.

Couples have been urged to speak up and make pension provisions for one another, after the study discovered that less than one in 20 have discussed the difference between a joint and single life annuities.

The investigation figures show that 39 per cent of those with a spouse or partner do not have provisions in place to ensure that payments will continue if their loved one passes away.

Another 13 per cent do not know what will happen to their pension income and other investments if their partner dies.

Less than half of the number of people surveyed has taken the time to arrange for their pension income to continue being received – with men more likely to take these steps than women.

Vince Smith-Hughes, head of pensions development at Prudential, said: “Talking about money can be difficult enough for many couples but clearly talking about death and money is a step too far for millions. Losing some or all of your income in retirement is a terrible risk to take and couples should think carefully about what happens in the event of one partner’s death, and seek advice where appropriate to ensure this eventuality is taken into account.”

Further to this, in a recent study by LV= it was found that 40 per cent of over 50s who were still in employment would have to lessen their pension contributions to cover debts if interest rates were hiked.

By Shelley DeBere

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