This one was fast. It went from rumor to fact in one day. No point in posting the rumors when you can post the facts:
Popular Financial Gets Smoked :
WASHINGTON, Jan 9 (Reuters) - Popular Inc. (BPOP.O: Quote, Profile , Research), Puerto Rico's largest banking group, said on Tuesday its U.S. consumer finance unit will exit the wholesale subprime mortgage origination business, resulting in charges of $39 million.
The San Juan-based company, parent of Banco Popular, said that as part of a restructuring, Popular Financial Holdings Inc. will instead focus on profitable businesses, and merge support functions with Banco Popular North America.
The company is the latest of many to curtail or get out of U.S. subprime originations, which involves lending to consumers with less-than-stellar credit histories.
Profits in the sector have shriveled due to increasing competition for a shrinking pool of borrowers, and amid signs that defaults and delinquencies are rising.
Popular plans to incur the charges in the fourth quarter of 2006 and first half of 2007. It disclosed the charges, which include $20 million of impairment, in a regulatory filing.
Tuesday, January 09, 2007
Another Sub Prime Down
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Update -
600 jobs to be cut
Popular Quits Sub-Prime Mortgages, Cuts Over 600 Jobs (Update3)
By Elizabeth Hester
Jan. 9 (Bloomberg) -- Popular Inc., owner of Puerto Rico's biggest bank, will close its sub-prime lending unit, a move that will cost the company $39 million in charges and about 627 people their jobs.
The company, which runs Banco Popular de Puerto Rico, plans to shut its wholesale non-prime mortgage origination business early in the current quarter along with the wholesale broker, retail and call-center units, said a federal filing today.
``Certainly, our performance has not been up to our standards,'' said Chief Executive Officer Richard Carrión in the filing, adding that the bank tried to improve results during 2006. ``Unfortunately those efforts proved to be insufficient.''
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