Largest subprime lender seeks job cuts

The Republic's largest subprime lender, Start Mortgages, is seeking at least 10 redundancies, due to the downturn in the property market and the funding crisis in the international markets. Simon Carswell, Finance Correspondent, reports.

The lender said it was seeking "a minimum of 10 redundancies" across the business and had started consulting its 100 staff on the job losses.

A spokesman for the company blamed the fallout from the US housing and home loans crisis, increases in the lender's funding costs and negative sentiment in the property market for the redundancies.

Start chief executive David Ingram said: "The predicted growth in the mortgage market in 2008, which we have already scaled up for, will not materialise due to the knock-on effect of the US credit squeeze. While we see the specialist sector as a key growth area in the Irish mortgage market, we need to scale our business according to current market conditions. While this programme of change is regrettable, it is necessary to ensure that our business remains robust and appropriately structured."

The company has grown significantly since it entered the market in November 2004. The spokesman said Start sold loans of €309 million in 2005, €680 million in 2006 and "significantly more" last year, though he declined to say how much, as the lender could not provide that figure until its majority shareholder, UK lender Kensington, published its 2007 results.

Kensington, which is owned by South African bank Investec, holds 65 per cent of the shareholding in Start, with the remaining shares owned by management. Start has been up for sale since October. Investec owns Nua Homeloans, another Irish subprime lender.

The company supplies the bulk of its mortgages to customers who are refinancing their debts, providing loans at a substantially higher rate than the mainstream or prime lenders. Its customers tend to have poor credit histories and have difficultites in obtaining mortgages from the main banks.

There are six players in the Irish subprime market, which is worth around €1.5 billion, with Start accounting for the bulk of the mortgages sold in the market. Subprime lenders have come under the remit of the Financial Regulator since the the start of this month.