US bank Wachovia is to sell its mortgage servicing business HomEq Servicing to British bank Barclays for $469 million in cash, Barclays has announced.
The US's fourth largest bank said that it wanted to sell off the business because of the increasingly competitive market, while Barclays said that it would use its new acquisition to build on its pre-existing mortgage securities business in the US.
HomeEq Servicing collects mortgage payments from borrowers, and currently manages around $43 billion-worth of loans.
It will now come under the management of Barclays Capital – the international investment arm of Barclays bank.
UK-based Barclays already has a sizeable presence in this particular US market, which has become increasingly lucrative in recent years, attracting the interest of several big investment banks including Credit Suisse and Lehman Brothers.
Wachovia has said that it will instead focus more on its prime mortgage servicing operations, having acquired mortgage lender Golden West Financial for $25.5 billion last month.