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Citibank puts brakes on origination

Staff Reporter 2 minute read

Citibank has tightened its lending policy in a move to reduce its volumes and ensure the bank “continues to operate profitably” into the future.

The lender has seen a surge in business in recent months which has exceeded targeted levels and neared record volumes.

Speaking with Mortgage Business, Peter Hayward, Citibank Head of Distribution and Marketing stressed that the bank remained “committed to the broker market and always will be committed to the market”.

However Mr Hayward said the current funding environment has made delivering competitively priced products “questionable”.

“The cost of funds continues to increase which in turn puts pressure on the returns from all lending institutions…this is also the case with Citi. 

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“Due to this we have taken the stance that we wish to limit the focus on new business to ensure that Citi continues to operate profitably in the future.” 

Citibank will now aim to maintain current loan book levels with a focus on replacing any run-off – a level of around 12 to15 per cent – and strengthening its broker relationships.

Amongst the policy changes announced yesterday by the bank, Citibank’s maximum LVR will be reduced to 90 per cent while borrowers will now be required to have a minimum 5 per cent genuine savings.

Serviceability will now be assessed on the ability to repay an 8 per cent interest rate while pre-approvals have now ceased for applications that don’t have property as security.

Broker commissions remain unchanged.

As a result of the new strategy the third-party team has shed 14 positions though most staff will be re-deployed within the group.

Mr Hayward said the focus of the remaining 40 strong team will be “strengthening relationships and investing in the future”.

“The [Citibank] BDM's are busy supporting the brokers by explaining the markets, sharing best practice, future-proofing their businesses and talking about how brokers can be a driving force now and in the future.”

 “Significant capital is being spent on systems and processes that will enable us to deliver a consistent offering to our broker partners that will also extend through to their clients”.

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Citibank puts brakes on origination
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