Money News: Shutters to come down at the Woolwich after 159 years

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The Independent Online

Up to 200 Barclays bank branches are to close over the next 18 months in a major shake-up of the business.

As part of the changes, all 373 branches of the Woolwich, which is owned by Barclays, will be rebranded with its parent's fascia, marking the end of its 159-year history on the high street.

It will now be developed solely as Barclays' mortgage brand.

Customers with Woolwich savings and current accounts will, in due course, be transferred to Barclays. The bank has promised to write to those affected at least two months in advance.

Around 1,200 jobs will be cut - mainly in the two banks' back office operations - but frontline branch staff are not expected to be affected.

The branch closures will take place in towns and cities where Woolwich and Barclays have a high street presence within 300 metres of each other. Where a branch is to shut, Barclays will give customers 90 days' notice.

"By the end of 2007, all customers will be able to use all branches," says a Barclays spokesman. "For Woolwich customers, this means the use of four times as many branches as they have today."

Although Barclays bought the Woolwich, a former building society, in 2000, the integration hasn't been as smooth as anticipated - particularly for customers. For example, many of the Woolwich's customers have not been able to use Barclays branches, and vice-versa.

Anybody with a Woolwich savings account should use last week's announcement to review their rate of interest rather than simply accepting the transfer to Barclays.

For example, the Woolwich Branch Saver account pays 3.6 per cent on balances over £5,000, while its equivalent at Barclays currently offers no more than 2.96 per cent.

Specialist mortgages: FSA to examine high-risk loans

The Financial Services Authority (FSA) is to review the way specialist brokers sell home loans to high-risk borrowers who have poor credit histories.

This September, the City regulator will examine the sales processes of expensive, so-called "sub-prime" mortgages. Those who buy such products typically have a string of bad debts, a county court judgement (CCJ) or a bankruptcy order against their names.

Many of these consumers don't qualify for ordinary high-street loans and so rely on specialist mortgage brokers and lenders, which in turn charge higher rates of interest to reflect the higher risk of the borrower defaulting on their monthly repayments.

A spokesman for the FSA said that its decision to turn its attention to the sector was not an indication of wrong-doing. The regulator wants to check that the face-to-face advice being given to consumers is transparent and easily understood.

The FSA carried out a similar review of the sub-prime sector last year. However, over the past 12 months, a number of mainstream lenders, including Alliance & Leicester bank (in a tie-up with the investment bank Lehman Brothers) and the Chelsea and Derbyshire building societies, have entered the specialist mortgage market.

Louise Cuming, the head of mortgages at the price comparison website, which lists home loan deals, said the growth in sub-prime lending was linked to a period of economic stability and low interest rates. These benign conditions have allowed mortgage lenders to sell more high-risk products.

House prices: Market is slowing, says Nationwide

House prices edged ahead by just 0.3 per cent in May, according to figures from the Nationwide.

In a "third consecutive month of flat growth", the building society said, growth in the housing market was now showing clear signs of slowing down.

The latest figures leave the annual rate of house price inflation at 5 per cent and the average cost of a home at £165,730.

Fionnuala Earley, Nationwide's group economist, said she expected the period of stability to continue: "[Economic] growth is strengthening and... interest rates are likely to remain at 4.5 per cent for some time to come."

Figures released by the Bank of England last week show that Britons now owe a total of more than £1,000bn in mortgage debt. Loans outstanding against residential property have reached £1.007 trillion, the first time mortgage borrowing has pushed through the trillion mark.

The number of mortgage approvals given by lenders to consumers also rose, up from 106,000 in April to 117,000 in May.

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