Fitch also said it would be conducting a review of the firm over the next month to determine the ‘relative creditworthiness of GMAC-RFC and ResCap’, the firm’s residential lending arm in the US.
Fitch believed the move was necessary as there were issues, especially in the short-term, over the firm’s profitability in a ‘stressed’ mortgage market.
However, in a statement, GMAC-RFC insisted ResCap remained in a strong position. "GMAC-RFC is closely monitoring the situation at ResCap. We believe we have the right plan in place to address the current challenges in the business and remain committed to turning around the business. Both GMAC-RFC and ResCap have made prudent liquidity management a priority. We believe we have the flexibility to weather the near-term challenges.”
Industry experts were divided as to the impact this would have on the company’s UK operation.
Mark Jannaway, director of OC&C Strategy Consultants, said: “The UK business has migrated away from its parent company in terms of funding sources. However, GMAC-RFC is a big player so this will definitely increase uncertainty in the non-conforming market.”
Mark Sismey-Durrant, chief executive of Heritable Bank, said: “This could have a huge impact on its cost of funds. The market is dependent on ratings so the agencies are very careful with any action they take. Any movement is seen as significant.”
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