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LloydsTSB set to enter sub-prime mortgages

LloydsTSB is poised to enter the sub-prime mortgage market and is recruiting senior managers and directors for the new division, according to industry sources.

One industry source says the bank, which owns mainstream lender Cheltenham & Gloucester, is not considering acquisitions but has instead appointed a recruitment consultancy, Maloney Search, to recruit staff from potential rivals.

Another sub-prime lender says LloydsTSB has already appointed two directors but warns that it is late in entering the market which is facing increased competition and reduced margins.

Sources believe LloydsTSB is initially planning to sell its own range of sub-prime products through its retail branch network.

London & Country mortgage specialist David Hollingworth says: “They would probably look at the middle market of sub-prime, like Bristol & West, and target people on the road to recovery. I would imagine they will also look at higher margin business. A player like LloydsTSB could make it in this market.”

The Mortgage Business managing director Bill Dudgeon says: “A lot of lenders are looking at this business model. It can be quite a good strategy as, instead of having to turn lots of people away who walk into branches, they can be off-ered a mortgage and related insurance products. It can work if you get it right but the snag is a bank branches can vary and impaired credit can be complicated.”

Lloyds TSB spokesman Emile Abu-Shakra says: “We are always looking at ways to develop and expand our business but we have no firm plans.”

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