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Bradford & Bingley buys arm of Lloyds TSB

Bradford & Bingley paid pounds 64m yesterday for Mortgage Express, the specialist mortgage lending arm of Lloyds TSB. The deal buys a pounds 1.5bn book of the sort of borrowers that would otherwise find it hard to secure a homeloan - the self-employed, people wanting a 100 per cent mortgage and those with negative equity.

Mortgage Express, which TSB acquired in 1986, suffered badly in the early 1990s housing recession thanks to its high risk portfolio of borrowers and the uncompetitive rates it was forced to charge to compensate for its higher than average default rate.

Lloyds TSB said it was selling Mortgage Express because it was no longer a good fit with C&G, the bulding society it acquired three years ago, and which specialises in more mainstream mortgage lending. The sale would avoid unnecessary duplication.

A spokesman for Bradford & Bingley said the company represented one of the last opportunities to buy a ready made niche lender to avoid the cost of setting up a new operation from scratch. It will sit alongside Bradford & Bingley's existing lending business and expand its target market to include people buying properties with a view to letting them and people on short term contracts who are unable to provide the security of a permanent staff position.

Mortgage Express operates from offices in Barnet, north London and employs about 300 staff. It currently has around 26,000 borrowers compared to a peak of 50,000. The business will continue to trade under its own name, with its existing management. Lloyds said it made a profit on the sale of about pounds 50m, which would be included in the bank's accounts for the half year to 30 June.