Bradford and Bingley announce further cuts to mortgage business
Article source: Catherine Couch - www.ftadviser.com
Bradford & Bingley, the troubled bank has today (1st October 2008) announced further cuts aimed at helping it to streamline its business operations and save on costs. In service sectors like the banking industry businesses are heavily reliant on a huge human resources pool to cope with demand, especially in boom periods.
After the announcements last weeks about job cuts aimed in branch mortgage advisors, Bradford and Bingley was nationalised on Monday in order to avoid another bank run such as that faced by Northern Rock in January of this year.
The further cuts announced today will result in the loss of in further 370 jobs which includes the remaining 50 in house mortgage advisors. It addition it 20 business development managers jobs will be redundant and their main mortgage processing centre in Borehamwood will be closed.
The press officer for Bradford and Bingley, Kerry Harvey, also commented that further potential cuts where under review for roles which support the seniors management and directors in the head office and these would most likely result in more redundancies. Miss Harvey would not however comment on whether any senior management jobs were on the line. Bradford and Bingley have not announced any plans to close any of its high street branches however with so many jobs cuts can they afford to keep their existing branch structure.
Bradford and Bingley, which was the nations biggest buy-to-let lender was nationalised on Monday, it total mortgage assets book worth in the region of £41 billion was taken over by the Treasury, and the banks savings and deposits business was bought by the Spanish banking giant Santander for around £20billion.
The treasury plans to of load the mortgage assets as and when the financial market recovers.
Now that Bradford and Bingley has more capital it is in a strong position to make the cuts and changes necessary to refocus the bank and get it back on track. Richard Pym, the Chief Exec of Bradford and Bingley says that he wants to: “focus the bank as a strong savings bank,” and plans for the bank to “put the problems of the past behind and have a business which is fit for purpose going forward.”
The FSA is now in talks with a number of banks, with the aim of having the bank taken over should it run into further trouble. This sort of rationlisation has already been seen with the recent take over of HBOS by Lloyds TSB and the huge investment made into Goldman Sachs by Warren Buffett. These sort of take overs and rationalisation are needed and will become increasingly common in the future. According to one US Analyst there are a third more banks in the world than we need.
Most of the mortgage processing activities from Borehamwood would be transferred to the West Yorkshire site. Although the business is streamlining, with resulting redundancies in order to save money in the long run, the redundancies and other restructuring costs will undoubtedly have a huge financial impact on the bank.
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