UK mortgage provider Market Financial Solutions has entered administration amid fraud allegations, with Barclays reportedly facing £600 million exposure according to The Times
The Times reported Barclays has 600 million pound ($809.70 million) exposure to MFS
A prominent UK mortgage lender has gone under. Barclays shares dropped in morning trading on Friday following a Times report suggesting the bank faces potential losses linked to the collapse of UK mortgage provider Market Financial Solutions (MFS).
The Times stated Barclays has £600 million exposure to MFS. Citi suggested the figure should be treated with some caution.
“Arranging a loan is very different to retaining that risk on B/S (balance sheet),” Citi said. “Also not clear if/how much could already be provisioned against (if anything).”
Barclays and Jefferies are reportedly amongst lenders with multimillion-pound exposures to a UK mortgage firm that has gone bust amid fraud allegations, reports Birmingham Live.
The FTSE 100 bank is understood to have a £600 million exposure to Market Financial Solutions, which went into administration after a High Court judge ruled that “very serious” allegations of fraud required investigation, triggering fresh concerns about the private credit sector.
Paresh Raja, its founder, said at the time the action did “not reflect a failure of the underlying business or the quality of our assets, but rather a technical and procedural impasse that has temporarily limited our access to everyday banking facilities”.
Insolvency specialists from Alix Partners were later appointed after two lenders to Market Financial Solutions, Amber Bridging and Zircon Bridging, claimed there were “serious irregularities” in its accounts. Jamie Dimon, the boss of JPMorgan Chase, cautioned in October: “When you see one cockroach, there are probably more, and so everyone should be forewarned of this one.”
Earlier this week, he also issued a warning that some lenders are committing “dumb things” and he’s beginning to notice similarities to the period preceding the 2008 financial crisis.
He stated: “I see a couple of people doing some dumb things. They’re just doing dumb things to create [net interest income], or say they’re winning in the mortgage business.”