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Concerns at societies’ bought books

Concerns have been raised over the size of mortgage books acquired by Britannia and West Bromwich.

The failure of Dunfermline has been attributed to its rapid investment in whole loan portfolios. Its loan portfolio rocketed to £772m in 2007, 39 per cent of which were specialist mortgages.

But the acquired mortgage books of West Brom and Britannia dwarf Dunfermline’s figures. West Bromwich has a loan book of £7.5bn, according to last year’s accounts, with a commercial loan book of £1.7bn and £125m of acquired buy-to-let loans. The average loan to value on this buy-to-let book in March 2008 accounts was 70.1 per cent.

Britannia has acquired at least £5.5bn of loans. One book has £2.77bn of residential loans with an average LTV of 89.9 per cent and another has £2.2bn of commercial mortgages with an average LTV of 75.6 per cent.

Email mortgages managing director Michael White says he would be surprised to see either society fail but warns that mut- uals’ books could be a concern. He says: “The key issue is no one knows what can happen with exposure to books like this. Even the best brains have fallen foul.”

Former Edeus chief executive Michael Bolton says: “Nobody is interested in scaremongering but concerns and rumours over various building societies will not go away and that is not a good thing.”

A Britannia spokeswoman says: “The mortgage books we acquired are performing in line with expectations. Our commercial investment property port-folio also remains strong despite the difficult environment.”

West Bromwich was unable to comment due to its immi- nent results.

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