The announcement was made at the B&B’s pre-close briefing to analysts earlier today. The official statement said: “Today ALLTEL and the Bradford & Bingley Group are announcing that they will discontinue their European joint venture, started over two years ago, to develop and sell new mortgage systems.
“The partners will make no further investment in the joint venture and B&B will bring the servicing of its mortgage customers back in-house.
“The partners believe that further investment is not justified given the current uncertainty created by changing mortgage regulation in the UK and Continental Europe and the slow development of the European mortgage outsourcing market.”
B&B will make an exceptional write-off in the region of £10 million in respect of its share of the development of the new system.
ALLTEL and B&B are currently negotiating the basis on which the joint venture will be terminated. B&B expects to make a further exceptional charge once these negotiations are completed but is confident this will be materially less than the systems write-off.
Commenting on the announcement, Nick Woodcock, managing director of AMS, conceded that expectations may have been too high and that lower expectations might have resulted in a more sustainable model.
Although AMS made significant business processing improvements to the management of B&B’s mortgage book, it was effectively managing the lender’s legacy system and had not yet succeeded in a mass transfer of the business to its own software.
Days before the announcement Mortgage Finance Gazette was informed that AMS was working on a pilot transfer, a development that gives ALLTEL Information Systems some encouragement.
AIS had a 75% stake in AMS and Woodcock confirmed that it was still very much in the market as a solutions provider to the financial services industry. It will be continuing to operate from its offices in the City and Rickmansworth, Herts.
