Commercial Property News

Bradford & Bingley, Britain's largest buy-to-let lender with 19% of the market, posted a £26.7 million  first-half pretax loss, hit by writedowns and investment losses, and said bad debts continued to rise.

 

The bank made a pretax profit of £180.4 million in the same period a year ago.

 

Bradford & Bingley said today that arrears had continued to deteriorate, worsening to 2.29% for the whole of the group from 1.48% at the full year. In its acquired mortgage book, the first-half number jumped to 5.11%.

 

The bank said it was taking action to improve bad debts, including renegotiating a contract with GMAC-RFC to 'take into account the changing economic conditions'. This contract requires B&B to buy £2.1 billion of sub-prime mortgages from GMAC by 2009. Mortgages in the acquired mortgage book which are more than 3 months in arrears are running at 5.11% in H1 2008, compared to 1.78% in the organic book. Because of this the bank was forced to make a credit impairment charge of £74.6 million, up from £5.3million last year.

 

The bank has also renegotiated it's contract with sub-prime lender Kensington which obliges it to buy portfolios of mortgages from Kensington, so that the £1.15 billion of mortgages it was due to buy by March 2009 has been extended to April 2011, with the value increased to £1.282 billion.

 

In June, Steven Crawshaw resigned from his role as chief executive due to health problems. He was replaced earlier this month by Richard Pym, the former head of Alliance & Leicester. Mr Pym now heads a bank with it's competitors and underwriters holding many of it's shares after a rights issue which had to be restructured twice after initially failing to attract sufficient interest.