Barclays cuts back risky lending after £228m hit from UK mortgage firm MFS

Barclays tightens lending after £228m loss from MFS collapse, warns of rising fraud and sets aside £105m for motor finance claims. | Contesto: cronaca

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• Barclays cuts back risky lending after £228m hit from UK mortgage firm MFS

Contesto

Barclays is scaling back its exposure to higher-risk lending after suffering a £228 million loss from the collapse of UK mortgage firm Market Financial Solutions (MFS), the bank disclosed on Tuesday. Chief Executive C.S. Venkatakrishnan cited a surge in fraudulent activity as a key factor behind the decision, while also revealing that the lender has set aside an additional £105 million to cover potential compensation costs related to motor finance mis-selling. The announcement came as part of the bank’s latest financial update, underscoring the mounting pressures on major lenders from both credit losses and regulatory scrutiny. MFS, a specialist lender focused on bridging loans and buy-to-let mortgages, entered administration in February amid allegations of widespread fraud. The UK’s Financial Conduct Authority has since launched a formal investigation into the circumstances surrounding the firm’s collapse. Barclays, which had significant exposure to MFS through lending and funding arrangements, was forced to write off the £228 million as a bad debt. The bank’s retreat from riskier lending segments is seen as a direct response to this shock, with executives now prioritizing portfolio quality over growth in marginal markets. The additional £105 million provision for motor finance compensation adds to a growing industry-wide headache. Barclays, like many of its peers, faces a wave of customer complaints and regulatory probes into historical commission arrangements on car loans. The bank had already set aside significant sums for this issue in previous quarters, but the latest top-up reflects an ongoing assessment of potential liabilities. Venkatakrishnan warned that fraud is becoming more sophisticated and pervasive across the financial system, forcing the bank to tighten its underwriting standards and increase investment in detection systems. The pullback from risky lending marks a strategic shift for Barclays, which had previously pursued growth in areas such as unsecured personal loans and credit cards. Analysts noted that the MFS failure, combined with the broader economic uncertainty and rising interest rates, has made the bank more cautious. The move could...

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Categoria: cronaca