Sale of Whiteaway Laidlaw boosts MBS’s solvency
MANCHESTER Building Society chairman (MBS) Michael Prior said that its sale of Whiteaway Laidlaw bank in January has boosted the financial strength of the mutual lender,
Prior said that the sale provided “significant benefits to the society through the boost to capital generated from the sale and from the streamlining of operations”.
The society did not reveal the amount paid for the bank, although Prior said that it was sold “at a healthy profit”.
MBS sold Whiteaway Laidlaw to an equity finance arm of Royal Bank of Scotland.
The sum was not disclosed, but a price tag of around £10m had previously been mooted. It had bought the bank in 2007 from Home Retail Group, which had inherited the Manchester-based bank following its acquisition of Great Universal Stores.
Speaking as MBS unveiled its results for 2010 this morning, Prior said that the sale “now leaves the Society with one of the highest overall solvency positions in the sector, well placed to return its operational volumes back towards pre-credit crunch levels.”
In 2010, the company increased profits after tax by 7.2% to £490,000. Income levels increased to £6.9m, but the society embarked on a “cautious reduction” of its balance sheet, with net assets shrinking by 4.6% to £894m.
“During 2010, a conservative approach was taken to capital management, strengthening the Society through shrinkage of the balance sheet,” said Prior. “As a consequence, the Society was able to increase its core tier 1 capital ratio from 8.6% to 9.2%.
“The steps taken in 2009 to reduce the Society’s cost base by over 20% provided a material benefit to 2010’s results, as did meticulous margin management seen throughout the year.”
