Morgan Stanley closes UK sub-prime division and cuts 1,000 jobs

by Gill Montia

Story link: Morgan Stanley closes UK sub-prime division and cuts 1,000 jobs

Morgan Stanley is closing its UK sub-prime mortgage division, Advantage Home Loans.

The business, which is based in Ellesmere Port in Cheshire, was acquired by the investment bank two years ago and its closure will result in the loss of around 160 jobs.

Further job losses are planned across other divisions of the bank, taking the total to approximately 1,000.

Advantage was acquired by Morgan Stanley at the end of 2005 when the UK sub-prime mortgage market was experiencing strong growth.

The lender specialises in mortgages for first-time buyers and at one point offered some borrowers seven times income.

Anthony Meola, chief operating officer at Morgan Stanley, said: “Given the dislocation in the mortgage markets, we have restructured our residential mortgage business to ensure we are appropriately positioned for the environment going forward.”

Some are interpreting Morgan Stanley’s closure of Advantage as connected to a recent warning by the Financial Services Authority (FSA) that the UK mortgage market has been experiencing widespread fraud.

The regulator has around 200 brokers under investigation and has so far referred one-third to its enforcement division.

The FSA’s head of fraud has described the problem as “bigger and more widespread” than previously thought.