Phil Basten

Co-op keeps pace with ‘mile long’ inquiry queue

The Co-operative Bank is being deluged with a record number of inquiries from property developers and investors looking to shore up their funding.

Phil Basten, head of the property finance unit at the Manchester-based bank, which has £2bn of loans out to property customers, said: "If you look out of the door there's a queue a mile long."

Basten said Co-op's deposits outweighed lending and that would remain the company policy going forward. The bank currently has a deposit to loan ratio of 105%.

"We will continue to grow in line with our deposits as a group and will not be looking for massive expansion," Basten explained.

The Co-op's maximum loan-to-value ratio has slipped from 70% in 2007 to 60% today, with only "one or two" deals likely outside of that this year.

Basten added it would be unlikely that new customers would be successful in securing lending while so many existing clients needed help.

"We have a strong work in progress book and our business going forward will be more than accounted for by existing clients. We are being very selective and focused on our own client base."

Basten added: "There's a real focus on quality investments with long-term leases and strong development cases where there are substantial prelets to good covenants."

He declined to reveal the amount of lending currently being pursued or to give details of specific deals but said a prelet hotel development and a superstore purchase were among recent North West transactions.

Speculative development is still a long way from resuming, Basten said, and property companies were being advised to look at alternative ways of gaining income from mothballed sites such as car parking to cover interest payments.

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