Carpetbaggers flock to B&B

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The Independent Online
Bradford & Bingley, Britain's second-biggest building society, enjoyed an inflow of pounds 383m in retail savings during the first half of the year, partly due to carpetbaggers opening accounts in the hope of a windfall.

"There has been a lot of carpetbagger activity," said the society's finance director, John Smith, yesterday as it unveiled half-year pre-tax profits of pounds 47.7m, down from pounds 52.7m last time.

"We were fairly confident the Nationwide Building Society vote [not to demutualise] would go the right way," said Mr Smith, stressing Bradford & Bingley was as strongly opposed to conversion to plc status as ever.

Societies such as Bradford & Bingley have been besieged this year by people opening new accounts in the hope of receiving windfall payments when the society converts to bank status.

Mr Smith said the society had viewed this latest carpetbagging mania as a "once-in-a-lifetime opportunity to win new business".

He added that the society's loyalty scheme, begun last year to distribute a part of profits to members, had reduced its half-year profits by pounds 10.2m. "We expect carpetbagging activity to die down now the Nationwide vote is out of the way," he said.

The society's assets grew by 16 per cent to just under pounds 18.9bn, reflecting new residential mortgage loans of pounds 927m in the first half and the acquisition of Mortgage Express in May. It said it planned to securitise part of the Mortgage Express loan book later this year, reducing on balance sheet assets by up to pounds 1bn.

The first-half results included a pounds 5.8m charge to cover the costs of an ongoing reorganisation programme and the society said the second-half figures would include a further unspecified charge. It also made a further pounds 3m provision against the costs of redress in pensions mis-selling cases.

"The results show Bradford & Bingley going from strength to strength as a mutual," said the chief executive, Christopher Rodrigues. "We have reduced margins, increased benefits to members and importantly continued to bring down costs."

Mr Rodrigues said its lending margins, the difference between its mortgage and deposit rates, would continue to narrow.