Johnson explains that Shawbrook “subjectively assesses” applications and “actively empowers” underwriters and managers to make decisions rather than
relying on the bane of brokers’ lives – the computer scorecard. On the secured loan side he admits
there are some “credit indicators” but ultimately every decision made on a Shawbrook loan is made by a Shawbrook person.
In a sense that strapline, though simply a marketing claim, is borne out action as least in some senses. “We want to get back to pragmatic good judgement rather than slavishly following the rules,” says Johnson. “We want to do the deals that should be done. That’s where the market has got frustrated in the past and we want to address that.”
The producTs Savings products distributed through the aggregator sites mainly bring in the cash which Johnson then lends back out mostly on commercial mortgages but also buy-to-let and secured second charge loans. And the lending side is done solely through intermediaries – something Johnson plans to preserve. “We’re very pro-broker,” says Johnson.
“We always have been and all of our lending is broker lending. We believe passionately in the value that brokers add – certainly in this market where I think customers’ confidence is dented and the ability to raise finance is harder and harder.
“I think the opportunity for brokers now is better than ever, albeit that the market’s still tough. It’s hard when the consumer hasn’t got the confidence to borrow, but for those customers who do see opportunity and do want to invest, there’s never been a better time to be a broker.” Johnson is also keen to benefit himself
from broker insight and understanding. “We will listen to where they think we should be offering products, how we should be tweaking what we already offer and where they think there are gaps in the market,” he says.
In the past half year the team has raised just over £190m in savings which, to put into context, almost equals what other
specialist lenders have raised from private equity firms and hedge funds to lend. “The retail savings market is a big market at around £1.2trillion. It’s very competitive as a result of the problems in the wholesale markets, making it the only way a lot of banks and building societies can raise capital at the moment,” he explains. “There’s certainly liquidity there and we plan to raise more in those markets. I think we’ve proven we can raise the funds and how much we raise in the future depends on our pricing points.” On the flip side the core of Shawbrook’s business is commercial term mortgages lent to trading businesses, SMEs and property investors. Secured loans to both employed and self-employed homeowners is the other major string to the lending bow.
The shorT-Term gAme Although Shawbrook does not offer development finance or short-term loans at the moment, the bank is very much sitting on the sidelines of these markets and some wonder whether the bank will broaden its proposition.
“Development finance is one of the markets that we might consider and we have some ambitious plans,” says Johnson. “It has some synergy in terms of what we do today, who we lend to and the brokers that we have relationships with.”
Shawbrook recently started offering unsecured loans through “affiliations with some home improvement companies” and Johnson confirms the lender plans to grow this part of the business significantly. “Our key focus is lending to personal business customers and exploring some niche areas that fit into that,” says Johnson. “There is an overlap with short-term lending there and we might look at doing something in that space. It’s a good fit with some of the customers we’re already lending to and we already see some of those transactions as it is.” Shawbrook offers 3-year and 5-year loans and Johnson says it’s entirely possible the bank will broaden its mortgage proposition and do some “shorter-term stuff”.
“I think it’s about us listening to the
brokers and looking at the market to see where we can compete,” Johnson says.
WhAT’s possIble Interestingly the bank is currently regulated to offer residential mortgage contracts although it is not set up to do these loans practically “at the moment” says Johnson. He does not rule out the possibility of venturing down that road in the future although makes it clear the commercial sector is where Shawbrook is focused for the near term.
But the self-employed sector of the market is underserved at the moment and it would seem a sensible extension of the bank’s philosophy of helping personal business customers. “We’re already doing a lot of lending to self-employed customers through our secured loans,” says Johnson. “Self- employed customers are finding it harder to access mortgage deals. “It’s one of the reasons we’ve
reinvented the way we use secured loans and our Platinum Loan is effectively a quasi-remortgage product with a lower rate and large loan balance. It’s designed to help those people who are looking to refinance but can’t find an opportunity in the mortgage market.” Depending on where the Mortgage Market Review lands a lot of those customers may find it even harder to get mortgages and become more disenfranchised. “We have the systems, the processes and the authorisations to start lending first-charge to these people,” says Johnson. “Operationally we could achieve it pretty quickly. It’s just a case of whether we think that’s the right market to be in at the right time. We have no firm plans at this stage.”
The firm plan Johnson does have is to
refresh the existing WLB legacy products and “get them better for brokers”.
securIng The fuTure Secured loans is a big focus for Johnson and seems the thing he is most excited about.
“I think secured loans is an area really coming into its own,” he says. “It’s a very flexible product because it has no
mortGaGe introducer NOVEMBER 2011 47
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