InterBay Commercial to re-launch

InterBay Commercial to re-launch




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Since the news surfaced that OneSavings Bank had conditionally agreed to buy InterBay Commercial last month, plans are well under way at InterBay for a re-launch in a couple of months. Jason McGee-Abe secured an interview with Colin Bell, Chief Executive, to find out more about what’s been happening over the last couple of years and what the future holds for the lender…



InterBay launched into the UK small balance commercial market in 2006, rebranding under the new name InterBay Commercial the following year, and quickly gained an excellent reputation in the commercial mortgage market. However, following the collapse of Lehman Brothers and the worldwide banking crisis, InterBay was sold in August 2008 by its then US parent Bayview Financial and ceased all new lending and withdrew from the market in 2008.

UK commercial lender 5D Group bought InterBay Commercial in August 2008 and merged with the lender, re-launching under the InterBay Commercial name under the control of Colin who was the CEO of InterBay. In that time, there were a number of redundancies made across both companies but InterBay managed to retain a number of its key lending staff to ensure it could return to lending once a suitable funder was found.

In the last three years, InterBay has been servicing its existing pool of commercial mortgages. The lender also received a number of offers from investors to fund a return to lending but said that the price of funding they were offering was too high, so decided to wait until the right deal came along.

OneSavings Bank

Talks with OneSavings Bank first surfaced in Q4 of 2011 and they have now exchanged contracts. InterBay is currently in the process of satisfying the condition, namely FSA authorisation for the transaction.

Colin stated: “OneSavings Bank have a solid balance sheet and gaining funding from the bank that owns us will allow us to return to lending as a flexible specialist commercial lender.

“These are exciting times for InterBay Commercial and the new partnership will allow us to return to lending in the small balance commercial arena and help intermediaries’ diversify and grow their current business portfolio.  The business will continue to focus on building upon our partnerships with packagers and to widen our product offering into new market areas, still focusing on quality borrowers in the SME market.

“We are hoping to be ready to re-launch in either September or October.”

Criteria

Although the full details of its funding line and products are not yet known, Colin disclosed some teasers of information for us. Traditionally, InterBay only looked at loans of £100,000 but Colin revealed that they are looking seriously at offering smaller loans upon re-launch - although they would expect most of their business to be in excess of £150,000.

The lender’s maximum loan size will not be as constrained as in the past at the £600,000 mark and the LTV level will probably be in the region of 70 to 75 per cent. There is still much demand for commercial finance and the type of borrower hasn’t changed. Lenders such as Aldermore and Shawbrook are in the market now but InterBay Commercial’s tailored underwriting, flexibility and approachability will be key to its niche in the market.

Colin said: “We will listen to all cases but we are not flexible on credit. We only deal with good quality clean borrowers. Due diligence includes checks on financial statements, business performance, track record of dealing with and paying suppliers etc.

“In terms of underwriting and due diligence when it comes to real estate underwriting, we get a full freeform external valuation report carried out and then have a team of in-house RICS-qualified surveyors who will audit check the report. Looking at credit deals, we will do a full check on financial conduct, credit history, income and experience, for example if dealing with an investment deal.  The internal surveyors also prove to be an invaluable source of information to packagers when they need to discuss potential properties.”

Staff

At its peak the lender had a team of over 60 full-time staff. Currently, the lender has 12 members of staff. Colin was quick to add that it was unfortunate that they had to make a number of redundancies as a result of the credit crunch and its subsequent effects, but they have maintained contact and relationships with many of the former employees, some of whom are in talks to re-join the lender.

Colin revealed that the lender is actively looking at having around 22 full-time members of staff in time for the re-launch. Future plans and expansion of staff numbers will be in relation and correlation to its future growth and increase in loan volumes.

InterBay has held onto its top lending employees during the past couple of years and has been open and transparent with its plans internally to all staff as well as with packagers. “We are a listening and communicative employer”, Colin stated.

Packager panel

B&C also found out that InterBay have been in communication with 10 to 15 packagers, not only to find out what they perceive as the main problems in the market currently but to discuss joining them on their packager panel. InterBay’s products will be offered exclusively through a panel of key partners throughout the UK.

Colin named a few of the packagers InterBay is looking at working with and B&C got in touch with them to get their views on InterBay stepping back into commercial lending.

Pete Turner, Commercial Director at All Types of Mortgages, told B&C that they’ve been in communication with InterBay over recent months about what problems brokers, businesses and borrowers are currently facing. He said: “InterBay’s re-launch is great news for the industry and will fill, we hope, the niche gap left by the high street. It will enable us to help our customers to attain commercial finance and will help to increase competition in an area with other lenders such as Aldermore and Shawbrook.”

Nic Rotton, Commercial Mortgage Consultant at Sterling Capital Reserve Ltd, said: “It’s great to see another lender coming into the market. It’s important as it allows us in these challenging times to have an alternative to the high street. It sends out a positive message that people are coming back to the market to lend on commercial mortgages. It’s equally great to see a big named lender, such as InterBay Commercial, coming back into the market and offering their services. Their product is definitely one which the market needs and we fully welcome them back.”

Tony Sutton, Managing Director at Specialist Commercial Finance, agreed that’s its exciting news for the industry. Tony added: “Any lender coming back is great news but InterBay was an excellent lender last time round and we’re very much looking forward to working with them again. For us, it’s particularly great to see another lender willing to fund on commercial, which brokers are most definitely seeking.”

The future

Colin commented: “We now have a great opportunity to help commercial mortgage borrowers by re-launching our company – especially with the strong financial backing of our new parent. We are in the middle of the funding and planning phase, so I cannot reveal plans of our funding line and future range but details will be disclosed in due course. We have been in discussions with a number of our potential new packager partners and are working through our offering and processes to ensure that all brokers and potential borrowers can fully utilise our flexible lending. I’m looking forward to further building our brand over the coming years and re-establishing InterBay Commercial as the premier commercial lender in the industry.”

SMEs and mortgage intermediaries are currently underserved with competition in the commercial sector and new product launches are limited so the news that a well-respected lender such as InterBay Commercial will be back is hugely welcome across the industry. Here at B&C, we look forward to reporting on future developments and the launch.

1 Comments

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    John Peters

    I am very excited that InterBay are coming back into commercial lending and look forward to working with them again

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