SHARES in Chester area-based price comparison website business Moneysupermarket.com Group plunged almost a third yesterday, after Firstplus said it was withdrawing from the home loans market.
Three hundred jobs are being axed by Barclays at its Firstplus business which provided second-charge loans allowing customers to borrow based on the equity in their home, but which will stop making loans to new customers from August 9.
Moneysupermarket.com issued a trading statement warning that revenues would be down by £7m following withdrawal of Firstplus from the home loans sector, while underlying earnings would fall by up to £5m. The Flintshire-based group, led by Simon Nixon, which earns fees when people take out products through its website, said it would try to offset the loss of Firstplus through tie-ups with other providers, and by reviewing costs and advertising spending.
The company, which employs around 600 people at its headquarters at St David’s Business Park, Ewloe, near Chester, has been one of the big success stories in the financial services sector over recent years.
When it floated in July, Moneysupermarket.com’s share price stood at 170p.
It closed last night at 72.9p, down 32% on the previous day.
Firstplus, which became part of Barclaycard in 2004 following Barclays’ acquisition of lender Woolwich in 2000, provided second-charge loans, allowing consumers to borrow based on the equity in their home.
The homeowner loans sector has been battered by the housing market downturn and trouble in the mortgage market.
Firstplus said the news would not affect its existing 128,000 customers, and some 130 employees will remain in Cardiff to deal with existing loans.
A further 300 positions, however, will be cut.
Its departure will leave just seven players in the home loans market, down from 18 last year.
Home loans enable people to borrow money against the value of their property without increasing the size of their mortgage.
The UK’s biggest trade union, Unite, said it was “incensed” at the decision to cut 300 jobs at Firstplus.
Deputy general secretary Graham Goddard said: “While the union understands that the market conditions mean that the Firstplus product is no longer viable, we wholeheartedly condemn the decision to run down the Cardiff site. Barclays should replace the 300 jobs lost with work from other parts of the bank.”
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