Now B&B jobs axe hits home

7:24am Friday 26th September 2008

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Staff at Bradford & Bingley’s head office locations in Bingley and Crossflatts are bracing themselves for job cuts.

Their roles are being reviewed by new chief executive Richard Pym as part of a major cost cutting programme at the former building society, which saw 370 posts go yesterday, mainly in the south, and which employs about 1,400 people in the Aire Valley.

The buy-to-let lender said: “The company confirms it is reviewing its head office support functions to reduce its costs to a level that is sustainable in the long term. This will result in a further reduction in staff numbers.”

Streamlining has already begun with the announcement yesterday of the planned closure early next year of a mortgage processing centre in Borehamwood, Hertfordshire, with the loss of 300 jobs.

About 70 jobs are going with the remainder of B&B’s branch-based mortgage advisors being made redundant along with cuts in its intermediary sales force.

The bank, which posted losses of £26.7 million in the first half of the year, is transferring some mortgage processing work to Main Street, Bingley and is also creating about 70 new posts in arrears management and retail savings.

Its network of 200 high street branches looks safe as the company said they remained at the heart of the business and there were no plans to reduce the number.

B&B says the cutbacks have been made in the light of the tough economic environment and a significantly-reduced volume of new mortgage applications. They will lead to annual cost savings of £15m.

Richard Pym, chief executive, said: “The changes we have announced focus the business as a strong savings bank, reduce the size of our lending activities, and increase our capacity in arrears collection.

“We are a strongly capitalised bank now undertaking a complex transition with regrettable job losses, but we are planning to put the problems of the past behind us and have a business which is fit for purpose going forward.”

Mike Cartwright, policy executive at Bradford Chamber of Commerce, which is due to publish its latest economic survey next week, said that companies were facing tough commercial decisions in the current downturn.

He said: “ While the news is disappointing, the difficult conditions nationally were bound to have some local repercussions.”

City analysts are warning that B&B’s days as a stand-alone business could be numbered with either a take-over by a “white knight” or a Government bail-out – à la Northern Rock – the only way forward.

Jonathan Pierce, at Credit Suisse, said B&B’s higher-than-average mortgage arrears rates and exposure to falling house prices meant the chances of any bigger bank playing a willing “white knight” take-over role was unlikely.

That left a managed acquisition by a bigger group, he said, or direct intervention from the Government as the probable alternatives.

Mr Pierce said: “The form of any potential resolution is unclear. Ultimately B&B’s biggest issue is asset quality and we doubt any major bank will want exposure to a £40 billion mortgage portfolio with arrears almost double the industry, and where more than 40 per cent of loans will be in negative equity if house prices fall 30 per cent.

“That would leave three other options. Go it alone – in our view, increasingly untenable - direct regulatory intervention, or a managed acquisition by other institutions likely at the cost of equity holders.”

Other equally gloomy assessments have been made by brokers Brewin Dolphin and Fox-Pitt Kelton.

Meanwhile two estate agency branches in Bradford and Shipley are to be closed as part of cutbacks by the UK’s largest group due to the slump in house sales.

Rentons Countrywide in Kirkgate, Bradford, and the Arndale Centre, Shipley, are to close with the loss of about eight jobs. A third branch in Main Street, Bingley, will remain open.

The Countrywide group has about 1,100 branches in the UK trading under various brand names.