Mortgage services plan for struggling B&B

Sep 30 2009 By Iain Laing, The Journal

NATIONALISED lender Bradford & Bingley is considering staving off eventual closure by turning itself into a mortgage services firm.

Managing director Richard Banks – currently charged with winding down the business – has outlined the plans on the anniversary of its slide into public ownership.

He said that if the firm becomes a top mortgage services firm, a third party could buy its £40bn loan book and B&B could run the mortgages. Although this is unlikely to happen until the economy recovers, he said: "We don’t want to wither on the vine."

B&B has seen staff numbers fall from about 1,400 to 1,000 in the past year through redundancies and natural wastage, although Mr Banks expects staff numbers to stabilise at this level and said the new strategy could safeguard hundreds of jobs.

He added: "We’ve got to give people a raison d’etre. If we’re the most efficient mortgage services provider then, if the assets are sold to a third party, we will be running them."

The group’s savings business was sold to Abbey and Alliance & Leicester owner Santander a year ago.

B&B posted a pre-tax loss of £160m for the six months to June, up from £26.7m a year earlier.

Although the lender predicted increasing repossessions this year, it said the proportion of its mortgages in arrears had risen more slowly than expected so far.

Possessions and loans that were more than three months in arrears rose to 5.88% in the first half of 2009, but edged downward to 5.82% at the end of July amid signs of stabilisation.

B&B traces its history back to 1851 but was formed in the 1964 merger which amalgamated the Bradford Equitable Building Society and Bingley Building Society.