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29 Feb, 2008

Marcel Le Gouais
Date: 26-Feb-2008

London 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."

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