London Scottish shuts branches

London Scottish Bank, which lends to households with poor credit histories, announced branch closures yesterday and a management overhaul of its lending business. The move followed a slide in profits in its consumer division, and rising bad debts.

London Scottish Bank, which lends to households with poor credit histories, announced branch closures yesterday and a management overhaul of its lending business. The move followed a slide in profits in its consumer division, and rising bad debts.

Barclays and HSBC have warned of slowing UK consumer loan growth and rising bad debts. Consumers have reined in spending in response to interest rate rises and the slowing housing market.

London Scottish said it would shut eight branches and make its finance director, Mark Tattersall, managing director of lending from September.

He will be replaced by Patrick McDonnell, currently the director of risk at the closed life-fund business Phoenix Group.

The lender's bad debt charge rose 35 per cent to £4.6m in the six months to the end of April, excluding £1.6m from the acquisition of a book of uncollected debts. While the bank's overall pre-tax profits rose 7.6 per cent to £9.9m in its first half, profits in the consumer lending division fell 16 per cent to £5.1m, reflecting uncertainty about interest rates and the housing market. All but one divisions experienced a decline in profits. The exception was the Robinson Way debt collection subsidiary, which saw profits rise 23 per cent.

Roy Reece, London Scottish's chief executive, said consumers had tightened their belts and were repaying some outstanding debt.