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It&#39s a New World for West Brom

The phrase “New World” may not immediately spring to mind on the mention of West Bromwich Building Society but it is on a drive to drop its image of a traditional, regional lender.

Last month, the mutual made the surprise move of buying the Commonwealth Bank of Australia&#39s New World UK residential mortgage portfolio of flexible and buy-to-let products, which are sold mainly through intermediaries.

West Brom has assets of £3.5bn and is the UK&#39s ninth-biggest building society. It says this acquisition will see the New World brand become the channel for its intermediary business.

But it may have a lot of hard work if CBA&#39s brief experience in the UK mortgage market is anything to go by. It decided to pull out of the sector despite a high-profile launch just a year ago to concentrate on its fund management business.

London & Country Mortgages adviser David Hollingworth points out there is more to success than a high-profile brand. He says: “New World created a burst of interest when it came to the market but it never quite cut it with products. They did plenty of advertising and mark-eting but it just shows that if you have not got the product to back it up it won&#39t work. West Brom will have to sharpen up the rates, as that is what will make it successful with intermediaries.”

West Brom sees it as an ideal opportunity to do more business in the South-east, away from its traditional client base in the Black Country.

Board director and secretary Stephen Karle says: “We are hoping to penetrate the London market through brokers who recognise the growth of flex-ible mortgage products. We will be advertising and building the brand to create a reputation with brokers for quality of service.”

New World will be managed by the building society&#39s subsidiary, the West Brom Mortgage Com-pany, set up in 1995 to acquire residential mortgage portfolios.

Karle says: “Prior to the acquisition of the the New World portfolio, we had purchased over £500m of residential loans in 13 portfolios.”

There is more to West Brom&#39s ambitions to spr-ead its wings than New World. It is developing more specialist types of lending and new distribution channels.

A recent innovation is its launch into correspondent lending, a relatively recent phenomenon in the UK. Last October, West Brom entered this market by teaming up with New-castle lender High Street Home Loans.

Targeting specialist categories of borrowers such as the self-employed, it has so far done £8m of broker business by correspondent lending, with another £2m in the pipeline.

Karle says: “So far, the initiative is proving to be a great success and we are delighted with the quality of customers and properties. Average mortgage size is around £100,000.”

It is also investing in a variety of distribution channels and recently merged its admin systems and opened a contact centre this month to handle internet and phone enquiries.

Karle says: “We are looking to recruit 150 people to work at the new contact centre based at our head office to give advice to customers and divert queries to the appropriate areas.”

This follows the launch of its internet site 18 months ago, which it says has proved a success but Karle is quick to emphasise that the web cannot replace the personal touch.

According to Karle, the market for online applications is not big and there are a lot of people who want face-to-face professional advice.

The society&#39s efforts to diversify distribution seem to be working and the amount of business that it does directly to customers is now about 50 per cent, with the other half through intermediaries.

West Brom says it is willing to do its bit for the local community and for employees and Karle is keen to talk of the awards it has won. These include being highly commended in the business in the community section at this year&#39s Midlands Business Awards and winning the equal opportunities employer and large company awards in the Midlands Business Excellence Awards in 2001.

West Brom seems on track to continue to build its business and its reputation but it has not all been a bed of roses for the group over the last few years. Last year, it admitted that it had to pay nearly £27m in legal bills and compensation following a High Court battle with pensioners missolds equity-release plans in the 80s and 90s.

But Karle seems justified in ending on a note of optimism about the continued financial growth of the society, saying: “We are about to announce record profits for the year ended March 31.”


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