HML has legacy mortgage market in its sights

The subsidiary of Skipton Building Society grew rapidly during the years of easy credit, but has now been forced to focus on new markets after the credit crunch brought a halt to specialist lending.

HML announced plans last week to cut 100 jobs across its 2,000-strong workforce as the business prepares for the future. The announcement came on the eve of the company's move into new 16m headquarters in Skipton, paid for by its mutual parent.

Brian Brodie, the managing director, said: "This is difficult but it is important the company has the right structure to make sure it is competitive and can grow again in the future."

In an interview with the Yorkshire Post, Mr Brodie warned HML's 80m turnover would "show quite a reduction this year", but insisted the business has a healthy future.

"We are continuing to win new contracts which is good news," he added.

"We won a significant new client at the end of last year. It proved our credibility to take on board a large book of mortgages with minimum disruption to the customer."

The deal is understood to be involve 3bn worth of mortgages owned by Bank of America, although HML would not comment on the client's identity.

Mr Brodie said: "If we are going to go after the books that sit in some of the bigger banks we need to have that credibility to do it.

"If you look at Royal Bank of Scotland, it has a number of different mortgage systems supporting a number of different brands. Lloyds, coming together with Halifax Bank of Scotland, has a lot of brands. Even Nationwide has a lot of brands.

"Now the market is less buoyant a lot of those brands will never lend again. But they still have the infrastructure that goes with all those brands. We are able to take that declining portfolio of mortgages, they can close their system down, saving infrastructure cost and we will run that down.

"What we are actively discussing with a number of people is how can we help them to release some of that cost and to remove some of that infrastructure and manage those brands for them. That has to be the new market for HML. That market is fairly sizeable."

The company manages mortgages worth 47bn on behalf of 35 clients, including Mortgage Express, GMAC, Kensington, Nationwide and investment banks such as JP Morgan and Morgan Stanley.

He said HML's systems would be able to handle a large amount of new business.

Major growth for HML came in 2006 to 2007 following the expansion of the specialist mortgage sector, including self-certified, buy-to-let and sub-prime loans.

"We have 35 clients and only one of them is lending," said Mr Brodie. "The business was built on the back of these people continuing to lend and grow. It leaves us in a position where we have to look at doing different things than we have done in the past."

Mr Brodie, who joined the business in 2007, said lower turnover of staff and increasing automation led the company to announce plans to axe more than 100 roles.

Expertise in management

HML grew out of Skipton Building Society's recognition that it had excess capacity in its infrastructure. Today it has 2,000 staff and offices in Skipton, Glasgow, Derry, Scarborough and Burnley.

Brian Brodie, the managing director, said: "We don't do any lending. We don't carry any credit risk. We don't set any credit policies. It's all defined and set by our clients."

He added: "A business like ours is going to get its competitive advantage by being absolutely brilliant at doing operations management."