B&B posts £26.7m loss as arrears soar

The UK’s biggest buy-to-let lender, Bradford & Bingley (B&B), has posted a loss of £26.7 million for the six months to the end of June.

The result compares with a pre-tax profit of £180.4 million in the same period of 2007.

Credit impairment charges for the six months rose to £74.6 million, up from £5.3 million in the first half of last year.

The steep rise came largely as a result of an increase in the number of mortgages in arrears of three months or more.

While there are plans to improve collection of debt, B&B says it anticipates that arrears will continue to rise throughout the remainder of 2008.

The bank is now focusing on higher quality lending and expects volumes to be down in the second half of the year.

Earlier this month, B&B completed a £4 million rights issue which attracted the support of only 28% of shareholders. Underwriters Citigroup and UBS were left with around 72% the new stock.

The fundraising plans, which were announced in May, had to be revised after the bank’s credit rating was downgraded by Moody’s, prompting US private equity firm, Texas Pacific Group, to abandon plans for a £179 million injection of cash into the business.

The lender has also appointed a new chief executive. Richard Pym has replaced Steven Crawshaw who resigned in June on grounds of ill health.

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