Nationalised B&B writing off £500m in bad mortgages

Mar 31 2009 by Iain Laing, The Journal

NATIONALISED lender Bradford & Bingley has revealed that it is writing off more than £500m in mortgage loans turned sour.

B&B is taking the charge of £507.7m to reflect estimated arrears at the end of 2008 and the impact of further house price falls ahead.

The hit compares with a £22.5m provision for the previous year. The firm said 4.6% of its £41bn mortgage book was three months or more in arrears, or repossessed.

The group’s savings business was sold to Abbey at the height of the financial meltdown last September and its mortgage book and other loans were taken on by the taxpayer. Including the Treasury aid and £612m sale of the savings arm to Abbey, B&B actually turned a profit of £134m last year – although the lender said it would have been loss-making without public support.

The lender warned: “In the prevailing economic environment, further deterioration in the arrears rate should be expected in 2009 and 2010.”