Brokers are hoping the Co-operative Bank will adopt the flexible underwriting approach that Cheltenham & Gloucester was well known for after the mutual’s parent group sealed a deal to buy 632 Lloyds branches.
This week, the Co-operative Group announced it will pay an initial £350m for the Project Verde branches and up to £400m based on the performance of Co-op’s combined banking business until 2027.
The deal will see Co-op take over the Lloyds TSB and C&G brands by November 2013. Lloyds will rebrand all 632 branches as TSB in the third quarter of 2013.
Brokers want Co-op to adopt the flexible underwriting approach C&G used before Lloyds moved to a more homogenised approach across its brands.
Lentune Mortgage Consultancy director Stuart Gregory says: “One of the key strengths of C&G’s lending was it was common sense lending, it was individually underwritten. If Co-op moved to that type of approach, it could make great strides in the market and borrowers would benefit.”
London & Country associate director of communications David Hollingworth says: “C&G used to have a flexible approach to underwriting and if you go far enough back, individual branches used to have mandates to approve cases, which was very good.”
However, some brokers believe Co-op could loosen its existing ties with the broker market because of a desire to get customers into its branches. Co-op does have an intermediary brand, Platform, but it does most of its lending in the buy-to-let sector, although it has a small selection of mainstream and near-prime products.
Coreco director Andrew Montlake says: “I think Co-op is less likely to use brokers now that it has a big branch network to service, which is a shame.”
A Co-op spokesman says: “It is too early to say how the deal will impact on our mortgage lending.”