Bank of England reports continued rise in mortgage approvals

Further signs are emerging of a recovery in the UK housing market, as the Bank of England said today that mortgage approvals rose again in December 2012.

The number of loan approvals for house purchases climbed to an 11-month high of 55,785, increasing for the fifth month in a row.

Analysts believe that the revival in the market is an indicator that the government’s Funding for Lending Scheme (FLS) has been successful in boosting lending. The scheme was launched at the start of August 2012 and was designed to encourage lending to households and growing businesses by allowing financial institutions to borrow at low interest rates.

Since the launch of FLS the number of mortgages on the market has increased and lenders have been reducing their mortgage rates, according to personal finance website This is Money.

Separate figures released today by the Building Societies Association show that, over the whole of 2012, mortgage lending by building societies and other mutual lenders grew to a total of GBP30.7bn. This is a 30% increase compared to the prior year.

Mutuals also represented a larger share of the overall lending market, taking a 22% market share of total new lending in the year, up from 17% in 2011. In December, total lending by mutuals increased to GBP2.4bn from GBP2.1bn a year earlier.

Adrian Coles, director-general of the Building Societies Association, said that mutual lenders such as building societies are likely to continue to play a prominent role in the mortgage market in 2013 and he pointed out that more than half of the 35 firms that were signed up to the Funding for Lending Scheme in December are mutuals.

Last week the Council of Mortgage Lenders (CML) reported that gross mortgage lending in December reached an estimated GBP11.7bn, taking the estimated total for the year to GBP143bn, up from GBP141bn in 2011. In the coming year the organisation forecasts that gross lending will reach GBP156bn.

The CML represents banks, building societies and other lenders who provide a combined 95% of all residential mortgage lending in the UK.

Citigroup seeks buyers for Brazilian credit card and consumer finance unit

US financial services group Citigroup Inc (NYSE:C) is looking to divest the Credicard consumer finance unit of its Brazilian business as part of a plan to concentrate on its strongest operations, the Valor Economico newspaper said today without citing sources.

According to the report, Citigroup has opened a data room to possible suitors with preliminary information about the unit. Credicard, with some 7m clients, could draw interest from some of Brazil’s biggest players including Banco PanAmericano SA (SAO:BPNM4), part of Banco BTG Pactual SA, Valor said, adding that a price tag had not been determined yet.

A public relations executive for Citigroup refused to comment on market speculation, when contacted by Reuters.

Recently, Valor cited Citigroup’s chief country officer Helio Magalhaes as saying in an interview that the group did not plan to sell Credicard.

US-based food group Hostess to sell Twinkies to private equity

US wholesale baker Hostess Brands Inc could soon announce a deal worth around USD400m (EUR296.2m) to divest certain snack cake brands such as Twinkies and Donettes to buyout firms Apollo Global Management LLC and C Dean Metropoulos & Co, two sources told Reuters.

The targeted activities also include the Dolly Madison bread and Hostess cupcakes brands.

The bankrupt company is currently picking stalking horse bidders for its various brands and activities. Previously, it agreed to sell most of its bread business plus the Beefsteak bread brand to Flowers Foods Inc (NYSE:FLO) in two separate transactions for up to USD360m and USD30m.

Furthermore, Hostess entered into an agreement to shed its Drake’s snack cake operation to McKee Foods Corp for USD27.5m as well as its Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s bread brands and some assets to United States Bakery Inc, also called Franz Family Bakery, for USD28.9m.

Other interested parties could still participate in an auction for these businesses and make better offers. According to the lead banker on the sale, Joshua Scherer of Perella Weinberg Partners, many parties have shown interest in Hostess’ assets, Reuters said.