Slump in mortgage demand forces B&B to cut jobs

Troubled buy-to-let mortgage lender Bradford & Bingley (B&B) has announced its mortgage processing centre in Borehamwood, Hertfordshire, is be closed with the loss of 370 jobs.

The processing centre is to close in the first quarter of 2009.

B&B, which is the UK’s biggest buy-to-let lender, blamed the continuing downturn in the market for mortgages.

The news come just 24 hours after the lender was downgraded by Fitch Ratings from BBB+ status to BBB-, only one notch above ‘speculative grade‘, or informally known as ‘junk’. Furthermore, Standard & Poor’s downgraded the lender from A-2 to A-3.

Earlier this week, there were reports that the Financial Services Authority (FSA) had been holding talks with potential buyers for B&B.

A Sunday newspaper suggested that Spanish bank Santander, which owns Abbey, had been approached by the FSA with regard to a takeover of B&B. Santander recently bought Alliance & Leicester.

The Sunday Telegraph also said the FSA has contacted Dutch banking group ING and National Australia Bank, owner of Yorkshire and Clydesdale banks.

Banking analysts have suggested that the uncertainty surrounding B&B may result in customers withdrawing funds out of the bank.

Yesterday’s news saw B&B’s shares close at a record low of 24p while shares have fallen to 23p today following the news regarding job losses. Its shares have suffered heavily over recent times due to two failed fundraising attempts.

Newly-appointed chief executive, Richard Pym, said the bank remains strongly capitalised and said the job losses would shave £15 million a year from its costs.

The bank also warned staff that it planned to reduce the size of its workforce at its head office in Yorkshire at a later date.

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