Bad debts and fraud double to leave B&B with £195m losses

Mar 20 2010 by Iain Laing, The Journal

NATIONALISED lender Bradford & Bingley has posted annual losses of £196m as write-offs on bad debts and fraud almost doubled.

Although the slide into the red was less than 2008’s £278m reverse, and a better result than expected in its business plan, the firm took an £884.1m loan hit, up from £467.7m the previous year.

Of this, £388.4m came through provisions for fraud and professional negligence, which the former buy-to-let specialist said mostly related to property valuations during the housing boom.

B&B is running down its mortgage loan book after being rescued by the taxpayer in September 2008, when its savings business was sold to Spain’s Santander. Managing director Richard Banks said B&B had made substantial progress against its business plans.

Although 5.54% of its £38bn loan book is in arrears, this is lower than the 5.88% in the first half of 2009 thanks to lower interest rates and almost 100 extra staff focused on collection.

The downward trend has continued so far during 2010 with arrears performance better than anticipated, B&B said.

The lender made more than 12,000 special arrangements to help customers falling behind with repayments last year, as well as supporting tenants left high and dry by bust buy-to-let investors.

The lender’s annual report also revealed a bonus tax liability of £37,000 after eight employees at B&B – including one director – earned bonuses totalling £274,000 for 2009.

The payouts will be deferred for three years.

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