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US banks may be set for mortgage retreat in UK

Network Data chief executive Richard Griffiths says there is a 50/50 chance that all US investment banks will with-draw their UK mortgage arms due to market conditions.

Griffiths says the market should “watch this space” with regard to the remaining US investment banks in the UK mortgage market.

He says: “I think if other players do go down the same route, they will do it quickly – before Easter. It is more of a case of who will be there in the market at the end of this.”

The two biggest names still in the market are Lehman Brothers with SPML and Preferred Mortgages and Merrill Lynch with Wave and Mortgages plc.

Griffiths’ warning comes as Morgan Stanley last week withdrew UK subsidiary Adv-antage. In a statement to the Stock Exchange, Morgan Stanley said it would discontinue its UK subsidiary. Around 1,000 staff in the UK and the US will be affected by the restructure of its residential mortgage business.

Morgan Stanley UK residential business manager Anthony Meola says: “Given the continued dislocation in the mortgage markets, we have restructured our residential mortgage business to ensure that we are appropriately positioned for the environment.”

Advantage last week sent an email to brokers which said: “Advantage regrets that, due to the continuing uncertainty in the mortgage markets, all Advantage products are withdrawn with immediate effect until further notice.”

The company joins the growing list of mortgage firms which have left the market following the fallout from the US sub-prime crash, such as Vic-toria Mortgages and The Mortgage Lender.

Merrill Lynch and Lehman Brothers both declined to comment.

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