crunchshirker

Well, more bad news hits the headlines. Bradford and Bingley have just announced that 370 jobs will go, mainly in their mortgage processing department.

To be fair, this has been on the cards for some time, however, the general outlook was that another bank could not possibly go under. I think to most, Bradford & Bingley’s demise is not a surprise. What is a surprise is that it wasn’t one of the first.

B&B posted losses of £26.7 million in only the first half of the year. My feeling is that this is the tip of the iceberg. The real crunch begins now.

B&B’s shares have slumped around 90% since the beginning of this year. For those who thought they could make a quick buck out of these bargain shares, today’s news must be pretty hard to swallow. A similar thing happened with Northern Rock, where their shares got so low, many want-to-be investors were caught out by the feeling that ‘this really can’t be happening, they have to go up’. I think we realise now that these shares are as worthless as most of the houses that this bank loaned on.

So where does this leave the mortgage holder? At present, B&B is relatively stable. Today’s move comes in a bid to save around £15 million at a time when mortgage lending has ground to a halt. However, the Chief executive did indicate that more bad news would follow. B&B are now closely working on their contingency to hopefully ride out the credit crunch storm, as all businesses should now be doing.

In an ironic twist, B&B are currently employing more staff for their debt collection division, in anticipation of rising mortgage arrears. You really can’t blame them for prioritising, now, can you?

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