Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

West Bromwich Building Society Is Not Out Of The Woods Yet, Moody’s Says

Recommended Posts

http://www.telegraph.co.uk/finance/persona...oodys-says.html

Although the agency did not downgrade the mutual, changing its rating to “stableâ€, it said West Brom’s efforts to reduce risk in its loan book had yet to produce tangible results.

Moody’s said: “Although the proposed transaction will improve West Brom’s loss absorption capacity, we consider that there are significant risks to its financial fundamentals stemming from the society’s existing loan portfolio.â€

It said the current rating for West Brom’s financial strength, E+, reflected “the high loss expectations from its commercial and buy-to-let portfolioâ€. Moody’s changed the outlook on the mutual’s financial strength rating from negative to stable.

“The proposed transaction mitigates some of these pressures to the extent of stabilising its financial strength rating at the current level, as reflected in the changed outlook,†the agency said. “In our analysis, however, the society still faces substantial provisioning needs and deteriorating asset quality trends in the context of declining house prices.â€

It added: “West Brom’s objectives to de-risk the balance sheet and restructure its commercial lending portfolio remain outstanding tasks that are still to produce tangible results. Faced with these challenges we consider that West Brom’s financial strength rating should remain in the E+ category.â€

Moody’s actions followed West Brom’s announcement of a proposed issuance of “profit participating deferred shares†– a debt-for-equity swap whereby West Brom’s existing subordinated debt of £182.5m would be converted to “core Tier 1†capital.

Agreement with the holders of that debt had already been reached and the society expected completion of the transfer in July, Moody’s said.

Moody’s described the debt swap as a “distressed exchange†because, under an alternative scenario of the society’s break-up, “the subordinated debt investors would be faced with a low level of recovery on their investmentâ€.

Jonathan Westhoff, West Brom’s finance director, said: “It is very pleasing to see the first positive move from Moody’s – negative to stable – for quite some time, pretty well for anyone in the [building society] sector in fact.â€

Have Moody's only just realised what the loan portfolio is?

Ahead of the curve on this one aren't you?

Isn't Moody's job to predict the quality of the loan long term?

Good job they understand the fundamentals of the economy so well.

Share this post


Link to post
Share on other sites

So this loan portfolio?

How bad can it be?

Surely it at worse they must have assets worth 50% of loans?

Or was someone really insane and gave 125% mortgages too

(assuming a 100% BTL mortgage is now worth 50% of the amount)

Share this post


Link to post
Share on other sites

it's all been taken care of - they can turn all their toxic debt into magic instruments, the noise from which should cover up the sound of creaking

21C accounting, makes Enron look like the society of quakers

Share this post


Link to post
Share on other sites
Guest DissipatedYouthIsValuable
it's all been taken care of - they can turn all their toxic debt into magic instruments, the noise from which should cover up the sound of creaking

21C accounting, makes Enron look like the society of quakers

:lol:

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   285 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.