Barclays Close FirstPlus Bad Credit Loan Business

Wed, 09 Jul 2008

Barclays has announced it is axing its FirstPlus division in Cardiff, which will result in the loss of 300 jobs .

The banking giant said Firstplus, which specialises in bad credit loans that act like a second mortgage, will stop making new loans to customers from August 9 due to slowing demand in wake of the credit crisis .

Barclays said falling profits and house prices are discouraging homeowners from taking out a loan against their home as they run the risk of being left with negative equity if their home loses value.

Another reason for FirstPlus' failure is thought to be the new regulation surrounding payment protection insurance, which accounted for a large portion of the company's profits .

Barclays said a total of 130 out of the 430 Firstplus staff will stay on to deal with existing customers and that alternative roles are being sought for the 300 affected employees across Barclays’ businesses.

Neil Radley, managing director of Firstplus, said: "In the past year we have tried a whole range of activities to develop our business but the market demand simply isn't strong enough."

"We recognise this is a difficult time for our people and will be providing all those affected with support and assistance."

The company added that the announcement will have no impact on the current loans of the 128,000 Firstplus customers.

The closure of FirstPlus means that just seven players remain in the personal loans market, compared to the 18 which existed before the credit crunch hit last year.
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