Turkey Banking Sector Analysis

Published: February 10 2008 23:10 | Last updated: February 10 2008 23:10 A private bank is shrugging off the impact of the credit squeeze to offer jumbo mortgage loans of ВЈ500,000 or more to affluent workers in the City. The move by Investec Private Bank, which deals with wealthy customers, comes at a time when banks have been cutting back on mortgage lending because of difficulties in funding loans in the capital markets.

Investec Private Bank, which is part of the South African bank, said the mortgages are aimed at people who earn a large proportion of their income from annual lump-sum bonuses. The loans are aimed at City workers who earn ВЈ300,000 and want a mortgage loan starting at ВЈ500,000, the company said. The new mortgage allows customers to make smaller payments in line with their basic salaries and then make up the difference with one large payment.

Lenders such as Bradford Bingley and GMAC have reined back on their lending since late last year. Investec said it had identified potential demand for the loans. Data from the Centre for Economic and Business Research indicate that there are 3,500 people in the City of London who could receive bonuses of more than ВЈ1m. Wayne Preston of Investec said there were 104,000 people in the UK with an annual income of more than ВЈ200,000 and many would receive large bonuses.

“The key to success in the high income and high net worth mortgage market is strong risk management and flexibility around meeting the needs of the client,” Mr Preston said. Investec will look at the record of the client before offering the mortgage, it said. It aims to offer a long-term mortgage that has the discipline of monthly payments but flexibility around the needs of the client.