29 Feb, 2008
Marcel Le Gouais
Scottish Bank plans to quit the mortgage market to plug a
£12.7m funding shortfall.
In a results statement out today, London Scottish revealed that it
has struggled to meet its minimum capital requirements since late
last year, after impairment charges on its unsecured loans
increased by £22m in 2007.
The bank also revealed a pre-tax loss of £5.6m for the 12
months to October 31 2007, compared to a 16.5m profit in 2005/6.
The bank states that it will wind up its lending divisions over
time to concentrate on developing its debt collection division,
which saw a 57% increase in profit last year, to £13.9m.
The bank also plans to expand other parts of the business to
generate additional income to correct the shortfall, including the
rolling out of its debt collection service, Robinson Way, to a
larger range of lenders and utility companies.
Peter Cordrey, chairman of London Scottish Bank, says: "Although
2007 was a difficult year for the group, the development and growth
of Robinson Way's successful debt collection business has continued
with profits up 57% to £13.9m."
He adds: "In future, the group's strategy will focus on the further
development and growth of Robinson Way whilst reducing the capital
employed in its lending divisions.
"We are working with our advisers to examine options to redress
the current shortfall in regulatory capital."