Nationwide sells estate agencies

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The Independent Online
NATIONWIDE, Britain's second-largest building society, yesterday joined the growing list of companies that have finally written off their 1980s foray into the estate agency business as an expensive mistake.

Nationwide agreed to sell its 300-strong chain of agents, in which it has lost pounds 200m over the past seven years, to Hambro Countrywide for pounds 1.

The deal places Hambro Countrywide, which until three years ago was in the second league among estate agency chains, firmly at the top of the market, with 750 branches. It gives the chain 6 per cent of sales of the UK's total residential market.

Harry Hill, managing director of Hambro Countrywide, said the company had succeeded because it concentrated on selling residential properties rather than boosting its mortgage-lending business.

'In the past, there was a temptation by building societies to see a move into this business as an opportunity for more mortgage- lending. Arguably this has been an expensive mistake,' Mr Hill said. 'This will allow the (Nationwide) estate agency chain to go back to what it is best at - selling homes.'

Hambro Countrywide is also buying Nationwide's separate surveying business, which employs nearly 600 people, for pounds 12m. About 250 vehicles are included in the price.

Nationwide Surveyors made pre-tax profits of pounds 4.18m in the year ended 31 March, on turnover of pounds 24m. Under the terms of the agreement, the business passing into the hands of Hambro Countrywide will have cash assets of not less than pounds 10.5m, plus other assets of pounds 8.5m.

The building society has agreed to accept pounds 12m-worth of shares in Hambro Countrywide as payment for the surveying business. It will then sell back half these shares to Hambros, the merchant bank that owns 52 per cent of the estate agency subsidiary. Nationwide will keep the remaining shares for at least two years.

In keeping with the new owners' decentralised strategy, branches will either revert to the names they had before being taken over by Nationwide or will be part of the Bairstow Eves chain of estate agents, also owned by Hambro Countrywide.

Among other losers in this deal is Guardian, the life insurance company formerly known as Guardian Royal Exchange. Two years ago, GRE bought an undisclosed stake in Nationwide's estate agency business, increasing this to 49 per cent. Nationwide last week bought Guardian's share of the business to expedite the sale.

A Guardian spokesman said its venture into the business had cost it pounds 50m. He declined to state how much Guardian's stake was sold for.

Brian Davis, Nationwide's chief executive, said: 'We will now be able to concentrate more effectively on our core financial services business, generating significant additional mortgage volumes.'

Analysts hailed the deal as good for Hambro in the long term. Prudential was paying pounds 500,000 per branch at the height of the 'feeding frenzy' for estate agencies in the late 1980s, while other smaller chains were paying pounds 250,000.

Estate agencies were identified as the key point of sale by building societies and life companies for housing-related products such as mortgages, endowment policies and insurance. The downturn in the housing market and disappointing cross-selling figures damaged this vision, forcing the Pru and then Abbey National to bale out.

Among the building societies, Bristol & West has cut its chain and Northern Rock has shed the branches it held. Yorkshire Building Society put its estate agencies up for sale last August. Halifax has reduced the number of its own branches from 550 to 520.

------------------------------------------------------------------------ HOW MUCH THE BIG CHAINS ARE LOSING ------------------------------------------------------------------------ No of offices No of offices Profit (loss) now end 1992 1993(pounds m) Halifax Property Services 530 550 (4) Royal Life Estates 484 517 (16) Hambro Countrywide* 449 473 4.3 Nationwide Estate Agents* 303 303 (13.86) Black Horse Agencies 360 393 (0.8) General Accident Property Services 360 390 (9.5) Cornerstone 344 355 ** Woolwich Property Services 240 257 (3.4) * Before yesterday's announcement. ** First year of trading since sold by Abbey National, no figures available. ------------------------------------------------------------------------

Ulster bright spot, page 29

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