Rescued West Brom says it will stay independent

Jun 13 2009 by Iain Laing, The Journal

West Bromwich, which has almost 600,000 members and employs about 800 staff, with nearly 50 branches, said it planned to be predominantly funded by traditional retail savings in future.

It said it had been knocked by an increase in credit risk provisions, writedowns on its homes portfolio and the society’s £12.2m contribution to the Financial Services Compensation Scheme.

New strategies which have already come into force include a focus on prime residential lending in its West Midlands heartland and withdrawal from the commercial and buy-to-let markets, now seen as high risk. It also has a plan to reduce non-retail funding to less than 15% by the end of 2010 as it looks to focus on funding through savings. West Bromwich increased its savings book by £1bn last year and has added a further £1bn so far this year. Residential mortgages are also now fully funded by retail savings.

Mr Sharpe said the firm would now focus on traditional products to help it “serve its region“, rather than the sort of riskier lending it had taken on in the past 10 years.

“You have to have scale to be able to operate in some of those markets that the West Bromwich did, to weather the financial storm,” he said, adding that in an ideal world the mutual would not be holding the sort of risks associated with the buy-to-let and commercial mortgage sectors.