Bradford And Bingley’s Annual Report Almost As Bleak As Its Head Office

Bradford and Bingley’s annual report raises a brace of issues, with a Goodwinesque pension debacle vying with rocketing bad assets in trying to paint the bank in the worst light possible.

Steven Crawshaw, B&B’s former chief exec who retired due to health concerns, is getting the weirdly exact sum of £105,318 a year as a pension, with his pension pot rising by £1.7m in 2008 to ensure he wasn’t penalised for taking early retirement. He also received £1m in salary and bonuses for the five months he did work last year. No-one’s going to kick a sick man when he’s down, so Crawshaw won’t get a public mauling when there’s plenty of freshly-minted Fred Goodwin effigies to be burned. Still, he was the guy that thought it a good idea to go after the buy-to-let market, and have 80% of B&B’s mortgages with people who don’t have to show their income to the bank – it’s debateable whether he’s really deserving of it.

Because his tactics are now going disasterously wrong. While pre-tax profit is technically up, it’s misleading as the bank made £216m cash profit from Santander buying them out; post-tax profit is down to just £18.2m. And looking longer term, it’s not pretty. 4.6% of its loans are in arrears, compared with 1.6% the previous year; losses on bad loans have reached over £500m, compared with £22.5m the previous year.  

To deal with the mounting losses, and paying back the government the bailout cash, they’ve announced in their new business plan that they’re winding down the bank over a number of years. Still, chairman Richard Pym has “reassured” staff that they’re jobs are safe for the next year. Wouldn’t be too sure about the year after though – check out the rate of full time job cuts, with 3,228 last year going down to 995 this year.

News from the FT today though that mortgages in general are starting to pick up again – approvals rose by the biggest margin for three years last month. The buy-to-let market is also showing signs of life as landlords start to snap up bargains. But before you put out the “Recession Over” bunting, remember that approval rates are still 72% lower than their peak two years ago. As unemployment rises, and real income falls, a small amount of people making the most of falling houses prices and favourable interest rates will pale next to the deeper, wider indictors like joblessness in assesssing the recession.

Posted by Ben Beaumont-Thomas in Hot Money | March 31, 2009 12:12PM |