Bradford & Bingley to axe 370 jobs after massive losses » Communities » 24dash.com

Struggling mortgage lender Bradford & Bingley said today it is cutting 370 jobs in a crackdown on costs.

The bulk of the job losses will come with the closure of its mortgage processing centre in Borehamwood, Hertfordshire, which employs 300 people.

The move comes after B&B posted losses of £26.7 million in the first half of the year, as the buy-to-let specialist is buffeted by credit crunch losses and rising arrears.

Bradford & Bingley (B&B) will transfer Borehamwood's mortgage processing work to its larger operations centre at Bingley, West Yorkshire.

The group is also cutting back its sales team, and axing its 50 remaining branch-based mortgage advisers after shedding 110 of them earlier in the year.

The firm hopes to save £15 million a year through the moves as it seeks to rein in mortgage lending following a year of turmoil for the business.

B&B warned that further cuts were to come following a review of its head office in Bradford, although it is adding 70 staff to its arrears collecting division in anticipation of more homeowners struggling to keep up with repayments.

The lender has around 3,000 staff and 300 branches.

New chief executive Richard Pym called the job losses "regrettable".

He said: "We are a strongly capitalised bank now undertaking a complex transition with regrettable job losses, but we are planning to put the problems of the past behind us and have a business which is fit for purpose going forward."

B&B has also rid itself of the "toxic" mortgage-backed investments and complex financial instruments which have been hit by the credit crunch to shore up its balance sheet.

B&B's shares fell 10% today amid more gloom over its prospects from City analysts, and have slumped more than 90% during the past year.

As well as rising mortgage arrears, the lender's funding costs have increased because of downgrades from investment ratings agencies as concerns about the business grow.

At the end of June, B&B held total customer deposits of £24.5 billion but its plunging share price has given it a stock market worth of just £330 million.

An additional burden for the business has been higher arrears on mortgages it is contractually obliged to buy from US financial services company GMAC, although it managed to renegotiate the terms of the onerous deal this week.

The Financial Services Authority was said last weekend to have sounded out three major international banks over a potential takeover of B&B, although there appears to be little appetite for a takeover.

A dramatic year for the business has seen its former chief executive resign for health reasons, while twice-rehashed plans to raise money from shareholders angered the City.

B&B eventually succeeded in raising £400 million after the botched rights issue process, but management credibility was dented by the drawn-out exercise.