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| Bradford & Bingley cuts 370 jobs | Bradford & Bingley cuts 370 jobs |
| (39 minutes later) | |
| Bradford & Bingley (B&B) is to cut 370 jobs because of the continuing downturn in the market for mortgages. | Bradford & Bingley (B&B) is to cut 370 jobs because of the continuing downturn in the market for mortgages. |
| It is shutting a mortgage processing centre and cutting its sales team that deals with mortgage brokers. | It is shutting a mortgage processing centre and cutting its sales team that deals with mortgage brokers. |
| B&B is also making its remaining 50 branch mortgage advisers redundant. It said that mortgage application numbers had fallen "significantly". | B&B is also making its remaining 50 branch mortgage advisers redundant. It said that mortgage application numbers had fallen "significantly". |
| More job cuts will be in the pipeline, the lender said, when it has finished a review of staffing at its head office. | More job cuts will be in the pipeline, the lender said, when it has finished a review of staffing at its head office. |
| "We are a strongly capitalised bank now undertaking a complex transition with regrettable job losses," said Richard Pym, the recently-appointed chief executive. | "We are a strongly capitalised bank now undertaking a complex transition with regrettable job losses," said Richard Pym, the recently-appointed chief executive. |
| "But we are planning to put the problems of the past behind us and have a business which is fit for purpose going forward." | "But we are planning to put the problems of the past behind us and have a business which is fit for purpose going forward." |
| This week, HM Revenue and Customs (HMRC) reported that residential property sales in the UK stood at just 62,000 in August, down by 54% on a year earlier. | This week, HM Revenue and Customs (HMRC) reported that residential property sales in the UK stood at just 62,000 in August, down by 54% on a year earlier. |
| Creditworthiness | Creditworthiness |
| The past week has seen widespread concern that B&B may be the next bank that needs to be rescued by the authorities because of the credit crunch. | The past week has seen widespread concern that B&B may be the next bank that needs to be rescued by the authorities because of the credit crunch. |
| The bank's creditworthiness has now been downgraded by all three of the main credit ratings agencies: Moody's, Standard & Poor's, and Fitch. | The bank's creditworthiness has now been downgraded by all three of the main credit ratings agencies: Moody's, Standard & Poor's, and Fitch. |
| Each has pointed to the bank's problem in raising funds in the financial markets and the excessive exposure of its mortgage book to buy-to-let and self-certified borrowers. | Each has pointed to the bank's problem in raising funds in the financial markets and the excessive exposure of its mortgage book to buy-to-let and self-certified borrowers. |
| It has been rumoured that the Financial Services Authority (FSA) has been trying to line up a "white knight" bidder to take over B&B. | |
| But Jonathan Pierce, an analysts at Credit Suisse, said this was unlikely. | |
| "Ultimately B&B's biggest issue is asset quality and we doubt any major bank will want exposure to a £40bn mortgage portfolio with arrears almost double the industry, and where over 40% of loans will be in negative equity if house prices fall 30% peak-to-trough, on our estimates," he said. | |
| Shares in the lender are currently at a record low of just 23p, after standing at 184p in May. | Shares in the lender are currently at a record low of just 23p, after standing at 184p in May. |
| A spokeswoman for the B&B said the bank was still open for business and was not withdrawing from new mortgage lending. | |
| Arrears | Arrears |
| Three hundred of the staff being made redundant work at the bank's mortgage processing department at Borehamwood in Hertfordshire. | Three hundred of the staff being made redundant work at the bank's mortgage processing department at Borehamwood in Hertfordshire. |
| They will lose their jobs in the first three months of next year when their work is transferred to a larger office at Bingley in West Yorkshire. | They will lose their jobs in the first three months of next year when their work is transferred to a larger office at Bingley in West Yorkshire. |
| B&B said it had no plans to cut any of its 337 High Street branches and would be taking on 70 new staff to collect repayments from the growing number of borrowers who are now in arrears. | B&B said it had no plans to cut any of its 337 High Street branches and would be taking on 70 new staff to collect repayments from the growing number of borrowers who are now in arrears. |
| This is not the first redundancy announcement from a major lender. | This is not the first redundancy announcement from a major lender. |
| The Northern Rock has cut at least 1,300 staff since it was nationalised at the start of the year. | The Northern Rock has cut at least 1,300 staff since it was nationalised at the start of the year. |
| And thousands of jobs are at risk now that HBOS, which owns the UK's biggest mortgage lender the Halifax, is in the process of being taken over in a rescue deal by Lloyds TSB. | And thousands of jobs are at risk now that HBOS, which owns the UK's biggest mortgage lender the Halifax, is in the process of being taken over in a rescue deal by Lloyds TSB. |
| Problem loans | Problem loans |
| The key issue that distinguishes the B&B from other lenders is that some of its loans to home owners have been turning bad at an alarming rate. | The key issue that distinguishes the B&B from other lenders is that some of its loans to home owners have been turning bad at an alarming rate. |
| Loans which it has made itself had a default rate of 1.78% by the end of June. | Loans which it has made itself had a default rate of 1.78% by the end of June. |
| But those mortgages which it had been buying in from other lenders, such as GMAC-RFC, have a much higher default rate of 5.11%. | But those mortgages which it had been buying in from other lenders, such as GMAC-RFC, have a much higher default rate of 5.11%. |
| This problem helped to push the bank into the red in the first half of the year and saw the appointment of Mr Pym, the former chief executive of the Alliance & Leicester bank, after the B&B struggled to raise an extra £400m from its shareholders during the summer to shore up its balance sheet. | This problem helped to push the bank into the red in the first half of the year and saw the appointment of Mr Pym, the former chief executive of the Alliance & Leicester bank, after the B&B struggled to raise an extra £400m from its shareholders during the summer to shore up its balance sheet. |
| This week B&B came to a deal with GMAC-RFC to avoid taking the last £1bn worth of mortgages from that lender, under an arrangement first struck in December 2006. | This week B&B came to a deal with GMAC-RFC to avoid taking the last £1bn worth of mortgages from that lender, under an arrangement first struck in December 2006. |