New Century Shuts Lending Unit as No Buyers Emerge (Update2)

New Century Financial Corp., the
biggest subprime mortgage company to declare bankruptcy, will
close its home-lending unit and fire about 2,000 people after
failing to find a buyer.

Chief Executive Officer Brad Morrice informed employees in a
conference call today, said Dan Gagnier, a spokesman for the
Irvine, California-based company. A court-administered auction
continues for the servicing business, which mails out monthly
statements and handles collections, Gagnier said. Separately, New
Century said KPMG LLP quit as the company's auditor.

New Century stopped taking applications in early March as
defaults by borrowers surged and bankers cut off its credit. The
company also faced state and federal probes of its lending
practices. It filed for bankruptcy April 2 and started trying to
sell the origination unit even as rival subprime lenders were
already seeking buyers.

``There's a lot of platforms available, and the New Century
platform hadn't originated any loans in 60 days,'' said Ron
Greenspan, a senior managing director at FTI Consulting Inc. who
is acting as financial adviser to New Century's unsecured
creditors. ``They were at a competitive disadvantage.''

New Century made about $60 billion in loans last year, and
employed 7,200 people at the end of 2005. It announced 3,200
dismissals when it filed for bankruptcy.

Housing Boom

The company rode the U.S. housing boom to become the largest
independent mortgage lender to subprime borrowers, only to
collapse as interest rates rose and home prices fell. Like rival
firms, the company lowered its lending standards to keep business
flowing after demand slumped.

The lending business consisted of a network of 57,000
independent mortgage brokers who locate borrowers and the
employee loan officers who handle applications and approvals.

The platform also included computer software and equipment
used to analyze applications, as well as 262 retail branches and
34 regional operations centers in 20 states.

``It is very expensive maintaining that platform,'' FTI's
Greenspan said. ``All the employees were still being paid and you
have rents, and if there was not a forthcoming bidder, the
committee did not feel it was a worthwhile expenditure to
continue to support it.''

The deadline to submit bids for the lending unit was
yesterday, and the job cuts take effect tomorrow, Gagnier said.

Carrington Capital Management LLC has agreed to bid at least
$139 million for the mortgage-servicing business.

Auditor Resigns

U.S. prosecutors opened a criminal probe of accounting
errors and trading in securities at New Century, the company said
March 2 in a filing with the U.S. Securities and Exchange
Commission. Since then, more than a dozen states have told the
company to halt operations, citing complaints from borrowers that
their loans weren't being funded.

New Century said in a regulatory filing today that KPMG had
resigned as the independent auditor on April 27, citing an
internal investigation of the company's accounting. New Century
said that since it's in liquidation, it doesn't expect to name a
replacement.

The company's shares fell 2.5 cents to 80.5 cents in over-
the-counter trading today. In May, 2006, they sold for as much as
$51.45.

Subprime Loans

Subprime mortgages are made to people with blemished credit
records or heavy debts, which make them among the riskiest for
lenders. The loans typically charge 2 to 3 percentage points more
than those to people with stronger credit profiles, and often
carry adjustable interest rates that can cause payments to jump
in later years, making defaults even more likely.

Subprime loans accounted for 86 percent of all New Century
loans last year, the company said in court filings.

New Century was founded in 1995 by a trio of former managers
at Option One Mortgage -- now a unit of H&R Block Inc. --
including current Chief Executive Officer Brad Morrice. In the
late 1990s the company survived an industry shakeout that led to
the bankruptcies of bigger rivals including United Cos.

Late payments on U.S. subprime mortgages reached a four-year
high in last year's final quarter, the Mortgage Bankers
Association reported. At least 50 mortgage companies have halted
operations or sought buyers since the start of 2006, according to
Bloomberg data.

Seeking Buyers

The surge in defaults forced Kansas City, Missouri-based
NovaStar Financial Inc. to hire Deutsche Bank AG last month to
advise on ``a range of strategic alternatives,'' including a
sale. H&R Block Inc. last month agreed to sell its subprime
mortgage unit, Option One, for 40 percent less than originally
sought. Fremont General Corp. said April 16 that it had agreed to
sell its mortgage business to an unidentified buyer.

Bose George, an analyst at Keefe Bruyette & Woods in New
York, said it's ``not all that surprising that capacity has to
get pulled out of the industry.'' He's forecasting that new
subprime mortgages will decline by 30 percent to 50 percent over
the next 12 to 18 months.

``Given the amount of excess capacity, you're going to have
to shut a lot of these platforms or pare a lot of them down
significantly,'' George said.

To contact the reporter on this story:
Bradley Keoun in New York at
.

Nigeria: Skye Bank Releases Naira Credit Card

Frances OviaLagos

Skye Bank Plc has introduced a new credit card denominated in naira, into the banking industry for customers. The primary objective is to offer a differentiated card payment value propositions to the discerning target market that would address the specific needs of each market taking into cognizance its peculiarities. The scheme developed by e-Channels Group of the bank is targeted at customers and non-customers of the bank who have verifiable and regular sources of income.

The new product has two variants of Classic and Premium. The Skyecard credit Classic is targeted at the low income earners who form a sizable number of the bank's current customer base, it renders benefits derivable from carrying a debit card while Premium is targeted at a wide market, differentiated by income bracket and credit profile such as income, employment structure, credit history and so on. It provides both secured and unsecured finance for customers and non-customers of the bank. Mr. Adesola Akinfemiwa, Managing Director, Skye Bank who expressed delight at the acceptance rate and transaction volume of debit cards, which the bank has been a leading promoter in the banking industry, said the new credit card would be very useful to customers as it would save them stress of carrying cash around at the risk of armed robbery attack. He said the intention of the bank is to put the cards in the hands of people who want cash before their next pay day.

General Manager, Retail Banking, Skye Bank, Mr. Dotun Adeniyi, explained that the new credit card introduction is in furtherance of the bank's marke leadership in card business. "As we launch these two credit cards, those who buy into it will enjoy the good things that are happening here and we will continue to maintain market leadership," he said.

Mr. Chuma Ezirim, Assistant General Manager, e-Channels Group, Skye Bank said the card process comprising issuance, operations and management is fully automated and runs on a robust credit card management system and that credit scoring and assessment module makes it possible for applications to be processed on-the-spot while there are no restrictions on usage.






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He said the size of the market is very large but very challenging and this i formed the bank's reason taking its time to offer to the market a credit card scheme that runs on a well tested, best in class and robust credit card management system. He said the scheme is expected to receive the required support from the government and Central Bank as it will complement various federal government initiatives towards the promotion of customer credit policy as incorporated in the National Economic Empowerment Development Strategy (NEEDS).

Ezirim who explained the features of the credit card said it is an electronic local card payment scheme which will be used to avail credit lines to individuals that has interest fee period of up to 30 days, interest rate of 18 per cent per annum on utilized credit only, flexible limit-based on income of cardholder; free internet and mobile banking services; SMS alerts on all transactions and two years validity period for the card, among others.

"A large proportion of Nigerians need extra cash outside monthly income to meet personal financial commitments, which they cannot easily obtain from friends and family members, and would like to pay back inn a convenient manner. "Skyecard credit avails the average Nigerian this opportunity," he added.