by Gary Webber
16. August 2009 00:07
Bradford & Bingley has admitted huge losses caused by bad debts.
Its savings and deposits business has been sold and now sits under the Santander umbrella, leaving the nationalised B&B with only its mortgage and loan book. And what a bad one it is...
Out of £40.3bn out on loan, the bad debt total now stands at £328.4m. That means it has quadrupled in a year. The culprit? Mortgage arrears.
This is probably a symptom of B&B's over-keen lending during the boom, combined with its none-too-smart acquisition of a tranche of adverse credit mortgages from Kensington and GMAC just in time for the credit crunch.
We also wonder whether there could be a touch of carelessness from lenders still stuck with B&B, hoping to break free one way or another and allowing their loans to fall into arrears. I'm not sure I'd want my credit rating affected by doing that, but then if you have poor credit in the first place, where's the loss? Just a thought...