One of the UK’s biggest joint, buy-to-let mortgage providers, Bradford and Bingley, (B&B) has been in the news recently for numerous reasons, included the resignation of the company’s chief executive, Stephen Crawshaw, down to ill health. This coincided with news of a takeover of the company, by a US private equity firm.
The mortgage specialist had not clarified whether Mr Crawshaw has stepped down of his own volition, or whether his contract was terminated. He had been in the post since 2004, having joined the company in 1999. He had previously served at Cheltenham and Gloucester and Lloyds TSB.
Mr Crawshaw has been in the firing line in the last few weeks, having been forced to apologise over a perceived 'u-turn' regarding the lender's financial position. Having ruled out a rights issue in the previous month, he revealed shortly after that the company would be pursuing a £300million rights issue.
The company, which set out to announce a profit warning today, as it appears unlikely to meet analysts' earlier approximation of between £160million and £200million in profits. The company recently revealed that bad debts rose by more than 40 per cent last year.
Meanwhile, it is believed that US private equity firm Texas Pacific Group is to acquire a 23 per cent stake in the company. It is expected to invest funds worth approximately £180 million; however, the news, coupled with the announcement of Mr Crawshaw's departure, led to a major decline in share prices.
Existing shareholders are likely to be asked to buy shares worth approximately £260million in order to strengthen the company's balance sheet. The mortgage lender made a pre-tax loss of £8million between January and April but is set to raise more capital than previously anticipated with the help of Texas Pacific Group; around £400million in total, according to estimates.
Head of savings at moneysupermarket.com, Kevin Mountford, said: "The latest news from Bradford and Bingley will do nothing to ease the growing uncertainty in the market generally. This ex-building society has seen its shares go into freefall over the past 12 months and recently launch a rights issue.
He added: "Although a number of banks are suffering, as far as B&B is concerned, TPG's interest could be seen as a positive and an indication the worst is behind it.
He concluded: "That said, understandably consumers will remain wary. Anyone with concerns would be wise to spread funds across a range of savings brands to ensure no more than £35,000 is invested with a single provider."
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