West Bromwich Building Society has agreed to sell Mortgageforce to management for a nominal consideration while retaining a minority interest in the broker franchise.
The society revealed the move last week as it posted losses of £18.5m for 2010, a reduction on the £48.8m of losses in made in 2009.
Losses for the financial year from continuing operations stands at £11.2m in 2010 compared to £39.3m in 2009.
Mortgageforce’s last published accounts, which are for the financial year ending March 31, 2009, reveal two outstanding loans from West Bromwich of £1.1m and £1.23m. Money Marketing understands one of the loans relates to provisions for future indemnity commission clawbacks. The results also show Mortgageforce made profits of £12,125 for the full year ending March 2009, down by 95 per cent from £300,150 the previous year.
If I Were You director and previous chief executive of Mortgageforce Rob Clifford says: “It is no surprise that a change of ownership should now be taking place again as building societies are increasingly retracting from diversified business models and protecting their core business.
“It is probably crucial and very important to the 100-plus franchisees and appointed representatives that a major financial institution is remaining a shareholder. After all, far too many big-name networks and aggregators despite the reputations, have fallen over owing money to their brokers.”
West Brom chief executive Robert Sharpe says: “The improvement on last year’s results clearly indicates that we are starting to see the benefits of the West Brom’s back to basics strategy with its renewed focus upon our traditional strengths as a regionally-based building society and concentrating on our core activities of savings and residential mortgages.”
Both West Brom and Mortgageforce declined to comment further on the sale.