Deutsche Bank’s entry into the mortgage market moved a step closer, with the German giant revealing that its new lending arm will be called db mortgages.The firm, whose mortgage products will include sub-prime, buy to let and self-certification, finally also confirmed the worst-kept secret in the market that its new team will be led by the ex-TMB quartet of Bill Dudgeon, Mark Bergin, Paul Graham and David Parry. It is keeping tight-lipped on the rest of its plans, such as db’s launch date, but that has not stopped the market speculating on what will come next and how successful db will be. Consultant Alan Cleary, who is understood to be advising on Oakwood’s expected lending entry this year, thinks Deutsche’s launch is likely to be imminent. He says: “I would think they will start up fairly quickly as they have announced their brand name and will want to prevent brokers from becoming frustrated by not launching once the name is out there.” Despite keeping quiet on the actual launch date, Dudgeon says: “There will be a bit of a race between everyone to see who can get out first.” Despite Deutsche European mortgages head Jeff Stolz claiming the new team will bring “continued growth” to the bank’s mortgage-backed securities business, not everyone is predicting a rosy future for the new venture. Hamptons International Mortgages managing director Kevin Duffy says: “I am not convinced that db have reconciled the concerns of their securities partners who may find there is a conflict of interest. Deutsche’s new arm will be the TMB of last year but rebranded as db mortgages. I do not expect a lot in terms of product innovation while the choice of name is unimaginative.” Dudgeon, who will lead the new operation, responds by insisting that he is “confident but not arrogant” about db mortgages’ chances of success once up and running. He does not reveal how many staff db mortgages will eventually employ nor whether it has any plans for acquisitions. He does, however, warn fellow lenders that db will be scouring the market for the best talent available. “We want the best people, wherever they are. Poaching will always happen in the commercial market,” he says. Dudgeon refuses to talk about potential acquisitions but it is widely believed that db will become an aggressive aggregator once it has got its feet under the table in the lending world, not least because of the sheer scale of it parent company. Mortgage Advisory Service head Stuart Wilson claims: “Deutsche will end up taking other lenders’ business as they are not suddenly going to attract new mortgage customers. It means the companies that have lost out will be susceptible to acquisition and buying other firms has to be on Deutsche’s radar. If they can acquire people then they can acquire smaller lenders because of their backing and they will eat those companies up for breakfast.” It is not just Deutsche that is predicted to go on the acquisition trail this year. With the anticipated new entry of a number of other lenders, the market is expected to undergo a degree of consolidation this year. Council of Mortgage Lenders spokesman Bernard Clark says: “We would expect some new companies to come in but we do not think that this year will be particularly different from other years. The market and consumers will benefit from a competitive environment.” Dudgeon says: “I think there will be some consolidation this year. For one, there are always rumours about some of the smaller building societies joining forces. Overall, the market will become more competitive, which is good news for brokers and customers.” Of those entrants, the Oakwood team, led by Michael Bolton, is expected to get going in the autumn, although many are none the wiser about the branding. Close Brothers has yet to confirm its entry although it is expected to decide any day now whether it will launch a mortgage lending division to add to its intermediary arm, Mortgage Intelligence. The market is also waiting to see Morgan Stanley’s next move after it snapped up Advantage Home Loans at the end of last year. American bank Countrywide has also been touted as a potential new player in the UK market. Cleary predicts the new players will hold the advan-tage. He says: “If you are not efficient you will come under pressure. The new entrants are not the ones that will come under pressure. It will be the ones with large overheads and legacy systems that feel the heat.” But Duffy says: “The existing players will be ferocious so it will be difficult for the new ones coming in and not all of them will succeed, although there will be varying definitions of what constitutes success. “I reckon Oakwood will be an outstanding success as they have a quality team. Their gang have been frustrated as they have had to be idle for a while but they will benefit from that because of the time they have had to get the proposition right.” Some are predicting further new entries as well as the likes of Oakwood, particularly among the big multinational banks eager to get a foothold in the UK ahead of the opening up of the European market. Wilson explains: “There is not enough business in the UK for all these companies coming in to service but that will all change with Europe on the horizon as it opens up so many more possibilities. “Take Deutsche, which has put down a marker in the UK market, but what it is really trying to do is look at cross-border lending in future – that is the Nirvana for many lenders.” Whether Deutsche’s venture succeeds remains to be seen. After selling off its fund UK fund management business this year, brokers may have concerns about its commitment but if nothing else it has the financial clout to make some noise.
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Financial advisers must take some responsibility for the lack of desire to close the pension and protection gaps
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