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Waving goodbye to more UK brands

The mortgage industry is buzzing with the news that Lehman Brothers will be withdrawing from the second charge market in the UK with the closure of both its Southern Pacific Personal Loans and London Mortgage Company brands.

Due to the current market conditions, Lehmans says it will be focusing on just Southern Pacific Mortgage Limited and Preferred but will consolidate some of LMC¹s features and its sales force into the two remaining brands.

This comes as the company restructures its global residential mortgage businesses which will see it cut 850 jobs globally, with around 100 job losses believed to take place in the UK.

Money Marketing previously revealed that Lehmans has been one of many financial firms unable to shift its last securitisation deal. This is despite the fact that the part of the paper it was trying to sell was AAA-rated. It is understood that it had to massively reprice its deal to over 35 basis points above libor after its original price – 12 bps over libor – received no interest.

As Lehmans is effectively funding loans from its own reserves and with it closing its US sub-prime subsidiary BNC Mortgages earlier last month, it is no wonder that the investment bank decided to review its current strategy.
Market commentators had suggested to MM that it might be worthwhile for Lehmans to consolidate a few of its brands. Lehmans says it will be putting significant investment into its IT re-platforming to further enhance and differentiate the brands to offer strong competitive choice.

Other news flying around is that mortgage guru Stephen Knight¹s much anticipated next venture – after he leaves GMAC-RFC following his six-month handover to Simon Knight this month – will see former GMAC-RFC managing director of operations Barry Searle join his old boss.

MM understands that Knight will only start talking about his plans once his contract with GMAC-RFC expires but it is clear that many in the market are already waiting in anticipation to find out his plans. In an interview with Money Marketing, Knight said that come September: ³I¹m going to start thinking seriously about what my opportunities might be. I think that will be in lending.²

He added that although he was comfortably off after selling his business a few years ago and that he could choose to retire at the age of 52, he fancies one last go.

In the MM interview, Knight provided advice to budding entreprenuers. He
said: ³Just drink in political, economic and social factors. So you get to this point, you analyse the hell out of it. Then you have to make a risk call that says we¹re gonna jump across that. I don¹t know what the outcome¹s going to be. I can guess it, I¹ve a gut instinct for it. So analyse as much as you can but then you have got to be brave enough to jump the innovation gap.²

So with fighting words like that I¹m sure many people in the market will be keen to see what Knight comes up with as he is definitely one of the most respected people in the mortgage market.

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