Barclays sells US mortgage operation

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The Independent Online
Barclays Bank is selling its $15bn US mortgage servicing operation for a one-off profit of $50m (£32m) in order to concentrate solely on investment banking in North America. Barclays expects the sale to be completed in the next three months. It comes at the start of a six-month review of all Barclays' operations in the US, aimed at consolidating its investment banking arm, BZW, as a key player in that market. The bank yesterday refused to rule out an acquisition on Wall Street, stressing that it had reached no conclusions yet.

The business being sold is BarclaysAmerican/Mortgage (BAM) which lost £236m in 1993, including a depreciation charge of £265m, and which returned to the black last year, making £4m. Barclays has agreed to sell it to Norwest Mortgage for an undisclosed sum.

Barclays' shares in London rose 8p to 587p yesterday.

In the US most mortgages originated by financial institutions are securitised and sold to investors, who in effect become the lenders.

The process of the collection of principal and interest paid by the home owner to the investor is managed by mortgage banks such as BAM, whether they have originated the loans themselves or bought the right to adminiser them from another financial institution.

Barclays has over the last few years been winding down its unsuccessful retail operations in the US and has handed over direction of all North American business to BZW in order to concentrate on corporate and institutional clients.

Barclays has disposed of all its retail banking operations in the US, its asset-backed finance business and the factoring arm.

Richard Webb, Barclays' chief executive officer in North America, said: "Barclays strategy in the US is to concentrate on serving investment banking clients, particularly those whose requirements are global."