Ash4781 Posted June 1, 2008 Share Posted June 1, 2008 (edited) http://business.timesonline.co.uk/tol/busi...icle4039915.ece BRITAIN’s biggest lender of buy-to-let mortgages, Bradford & Bingley, which is in the middle of a rights-issue roadshow, will stun the City this week with a profit warning and the departure of its embattled chief executive, Steven Crawshaw. The announcement will trigger widespread concern that British banks are sitting on a time-bomb of rising mortgage arrears and mounting bad debt. It will also reignite fears about the viability of some of our top financial institutions. Rod Kent, the bank’s chairman, will take over executive control of the bank, which has a network of 200 branches, while it looks for a replacement chief executive. It is understood that Crawshaw, 47, has been unwell for some time and has been looking to step down. The profit warning is expected to be contained within the bank’s rights-issue document that will be sent to investors in the next five days. Profits for this financial year will be significantly lower than analysts’ forecasts. The bank has been hit hard by mounting arrears from borrowers and squeezed margins. Last year B&B made pretax profits before exceptionals of £336m. This year analysts had predicted a range between £160m and £200m. However, this is thought to be far too optimistic and profits will be lower. The B&B profit warning comes at a bad time for the banking sector. HBOS, Britain’s biggest mortgage lender, is about to launch its £4 billion rights issue, while Royal Bank of Scotland is in the closing stages of raising £12 billion. For B&B, the admission of lower profits comes at a time when it is trying to raise £300m from shareholders. On Friday, its share price closed just 6¼p above the 82p-per-share price of the rights issue. In the past four weeks the price has fallen as concerns grow about the state of the bank’s finances. However, while its profits will be lower, this is not a repeat of the nationalisation of Northern Rock. Analysts say even if the share price falls beneath the rights-issue price it has been underwritten by investment banks. They also say that the bank is well capitalised and its shares are trading at half its net asset value. Kent, a City veteran who built his reputation as chief executive of Close Brothers, the boutique investment bank, must work hard to rebuild the confidence of shareholders. One of the bank’s top five investors said this weekend: “It’s a bit like they are driving along in a little cartoon car, just waiting to fall off the cliff.” Another said: “The share price has been saying for weeks that something is wrong, but no guidance has been given to the City”. At its peak, in March 2006, B&B’s stock-market value hit £3.2 billion. It is now a shadow of its former self and at Friday’s close was worth only £545m. Most analysts believe that the bank will struggle to remain independent and that a takeover is now inevitable. Crawshaw joined the company nine years ago before becoming chief executive in 2004. He is seen as an able operator but the scale of the problems have proved too much. Pressure will also come on some of the nonexecutives, including Kent, for failing to ensure that the City was kept informed. Analysts say to raise money with so much uncertainty about the group’s future profitability is going to be tough. Oh dear. Is this aready factored into the share price ? Edited June 1, 2008 by Ash4781 Quote Link to comment Share on other sites More sharing options...
Bearback Posted June 1, 2008 Share Posted June 1, 2008 Will the share price fall below the 82p rights issue price on Monday? Surely it will. Quote Link to comment Share on other sites More sharing options...
Zach1965 Posted June 1, 2008 Share Posted June 1, 2008 I would image there are meetings going on over this weekend between the FSA the Treasury and the so called 'bankers' who run B&B. I would image they are telephoning around to see if another bank will take them over. If not I wouldn't leave more than 30K in there. Wednesdays are always good days to announce bad news. Quote Link to comment Share on other sites More sharing options...
Earplug Posted June 1, 2008 Share Posted June 1, 2008 http://www.bloomberg.com/apps/news?pid=206...&refer=home Further capital raising ? massive Quote Link to comment Share on other sites More sharing options...
Injin Posted June 1, 2008 Share Posted June 1, 2008 http://www.bloomberg.com/apps/news?pid=206...&refer=homeFurther capital raising ? massive Everything now being done is just to say "We tried" when they sit accross from Alisatair on Monday afternoon, cap in hand. Quote Link to comment Share on other sites More sharing options...
DoctorJ Posted June 1, 2008 Share Posted June 1, 2008 http://www.bloomberg.com/apps/news?pid=206...&refer=homeFurther capital raising ? massive June 1 (Bloomberg) -- Bradford & Bingley Plc, the U.K.'s biggest mortgage lender to landlords, said Chief Executive Officer Stephen Crawshaw quit for health reasons and that it would provide more details on a capital increase tomorrow. Poor guy. Hes messed himself so badly that they have had to send him home. Game over Muppets! ps if this one goes down, will we have a repeat of the NR fiasco? Quote Link to comment Share on other sites More sharing options...
bobby9983 Posted June 1, 2008 Share Posted June 1, 2008 (edited) The problem with B&B is that they have been very loose on their criteria over the past 3 years on BTL business. They accepted borrowers that would have been turned away from all of their main competitors (BM solutions etc). They explicitly encouraged 100% financing of BTL using 1 day bridge to remortgage (this was withdrawn earlier this year). They were coerced into 90% loan to value and 110% rental calculation regular BTL business by the, no longer around, idiotic US funded competition (more sensible BTL lenders such as Paragon just upped their rates to effectively shut their doors in 2005 instead) which has given them a ticking time bomb when the rates reset in 2-3 years time. All in all they got carried away. As did most of our banks post 2005. By the way being a newcomer here I can't help thinking that we would have had a big price correction late 2004, does anyone remember when house prices wobbled then? This was about the same time that Merrill Lynch bought sub prime lender Mortgages PLC, Lehman's came in and got SPML and Preferred, Northern Rock and all the 2nd charge lenders started to get really aggressive and then lending went crazy. This was all about the same time that Mortgages became statutorily regulated by the FSA rather than the voluntary MCCB. I can't help but think that the FSA weren't ready and that just allowed everyone in the mortgage market to start taking the piss big time. Their "principles based regulation" was just lost on a rules based market. I think the FSA brought in a principles based environment just so they didn't have to do any work. Anyway, it's bit them on the bum now they'll be really busy for the next decade sorting the mess out. Edited June 1, 2008 by bobby9983 Quote Link to comment Share on other sites More sharing options...
Errol Posted June 1, 2008 Share Posted June 1, 2008 Remember that any bailout will now be done in secret. For the protection of the people, of course. It's all in our best interests, don't you know. Quote Link to comment Share on other sites More sharing options...
deadman Posted June 1, 2008 Share Posted June 1, 2008 A close relative of mine has significantly more than 30k in their B&B account. She's old and unsure of what to do next. Is it a good idea to have a serious word with her and get the 'extra' out sharpish? Quote Link to comment Share on other sites More sharing options...
Alistair darlings mole Posted June 1, 2008 Share Posted June 1, 2008 Remember that any bailout will now be done in secret. For the protection of the people, of course.It's all in our best interests, don't you know. Correct. Sad times we live in under labour. If you have more cash than 30k, Get it out on monday first thing. Quote Link to comment Share on other sites More sharing options...
walsingham Posted June 1, 2008 Share Posted June 1, 2008 Correct. Sad times we live in under labour. If you have more cash than 30k, Get it out on monday first thing. I thought it was up to 35K? Quote Link to comment Share on other sites More sharing options...
centrallondon Posted June 1, 2008 Share Posted June 1, 2008 I thought it was up to 35K? Just checked my account, they haven't added the interest for May. Time to get your money out ? Quote Link to comment Share on other sites More sharing options...
Alistair darlings mole Posted June 1, 2008 Share Posted June 1, 2008 I thought it was up to 35K? you might be right. I knew it was 30k something, but just wasn't sure. Quote Link to comment Share on other sites More sharing options...
bomberbrown Posted June 1, 2008 Share Posted June 1, 2008 Fab!! Another run on a bank. Two in the space of a year. What a fantastic achievement for New Liebour. Quote Link to comment Share on other sites More sharing options...
dinsdale Posted June 1, 2008 Share Posted June 1, 2008 Remember that any bailout will now be done in secret. So it may have happened already? Surely it would show up somewhere in the public domain? Quote Link to comment Share on other sites More sharing options...
Giraffe Posted June 1, 2008 Share Posted June 1, 2008 Just checked my account, they haven't added the interest for May.Time to get your money out ? Just checked mine - it's the same no interest for May. I have asked for a closing withdrawal to be made via their message system. do you know if there is a way to set this up automatically online ? I cannot find it. I have 30.6K When I first put the cash with them they were competitive on rates, but since then they have slipped 0.5% . will give Kaupthing edge a shot as I am at the safety limit with Icesave as well. Quote Link to comment Share on other sites More sharing options...
BigBlue Posted June 1, 2008 Share Posted June 1, 2008 So it may have happened already? Surely it would show up somewhere in the public domain? I can't believe that 'they' could ever hope to keep something like this a secret. There's always someone on the inside that, for whatever reason, ends up leaking the story. Maybe not immediately, but eventually it comes out. Maybe that's the best 'they' can hope for, that the story only surfaces when it's too late to have any negative impact. Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted June 1, 2008 Share Posted June 1, 2008 Just checked mine - it's the same no interest for May. I have asked for a closing withdrawal to be made via their message system. do you know if there is a way to set this up automatically online ? I cannot find it. I have 30.6K When I first put the cash with them they were competitive on rates, but since then they have slipped 0.5% . will give Kaupthing edge a shot as I am at the safety limit with Icesave as well. Sounds to me like you've put your cash in all the most dodgy banks. I wouldn't have ANY money in any of those you mention, not even 30K - I don't trust the deposit guarantee, at least not long term. It might be okay the first time a bank goes bust but that's about all. The rule is when banks are in a difficult position as they are now, NOT to invest your money in one that is offering significantly higher interest rates - it is a sure signal that they are desperate for cash. The Icelandic banks are in deep holes as are B & B and A & L - and that's just for starters. Quote Link to comment Share on other sites More sharing options...
Giraffe Posted June 1, 2008 Share Posted June 1, 2008 (edited) Sounds to me like you've put your cash in all the most dodgy banks. I wouldn't have ANY money in any of those you mention, not even 30K - I don't trust the deposit guarantee, at least not long term. It might be okay the first time a bank goes bust but that's about all.The rule is when banks are in a difficult position as they are now, NOT to invest your money in one that is offering significantly higher interest rates - it is a sure signal that they are desperate for cash. The Icelandic banks are in deep holes as are B & B and A & L - and that's just for starters. yes I know the risks but I hoping I can act quickly enough to not get caught out. I'm desperate to get the highest rate possible to prevent the fund being gobbled by inflation. is there anything "safe" paying 6.5% anyone is aware of? (dont want any time lockins) (PS my business account is with the A&L so looks like i'm a basket case!) Edited June 1, 2008 by Giraffe Quote Link to comment Share on other sites More sharing options...
deadman Posted June 1, 2008 Share Posted June 1, 2008 Just got off the phone and my relative is opening an NSI account tomorrow. All of her cash is coming out of B&B. She has been with them for many many years. Best to beat the rush, that's what I say. Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted June 1, 2008 Share Posted June 1, 2008 yes I know the risks but I hoping I can act quickly enough to not get caught out. I'm desperate to get the highest rate possible to prevent the fund being gobbled by inflation. is there anything "safe" paying 6.5% anyone is aware of? (dont want any time lockins)(PS my business account is with the A&L so looks like i'm a basket case!) Northern Rock bank run started like this - whisperings over the weekend and inability to access online accounts and transfer cash. By the Monday people were queuing outside the doors. You may be too late with B & B already. Quote Link to comment Share on other sites More sharing options...
Errol Posted June 1, 2008 Share Posted June 1, 2008 (edited) I would have said that very few banks are safe. The insolvency crisis is world-wide and has infected almost every institution. Be very wary of banks offering high levels of interest. This is a signal that they are desperate. Edited June 1, 2008 by Errol Quote Link to comment Share on other sites More sharing options...
Giraffe Posted June 1, 2008 Share Posted June 1, 2008 (edited) Northern Rock bank run started like this - whisperings over the weekend and inability to access online accounts and transfer cash. By the Monday people were queuing outside the doors.You may be too late with B & B already. Yes the "weekend leak" (profit warning) is a very ominous sign. scared the bejesus out of me. Edited June 1, 2008 by Giraffe Quote Link to comment Share on other sites More sharing options...
Errol Posted June 1, 2008 Share Posted June 1, 2008 I don't understand. Wasn't everyone expecting this anyway? Quote Link to comment Share on other sites More sharing options...
papag Posted June 1, 2008 Share Posted June 1, 2008 Just got off the phone and my relative is opening an NSI account tomorrow.All of her cash is coming out of B&B. She has been with them for many many years. Best to beat the rush, that's what I say. Looks like most of these Yorkshire folk will be going through this again http://www.youtube.com/watch?v=Gu-VPFGAwH0...feature=related Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.