B&B takes £140m hit on Charcol disposal

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The Independent Online

Bradford & Bingley, Britain's biggest buy-to-let lender, sold its mortgage broker Charcol yesterday and predicted that full-year profits would be towards the top end of market expectations. The sale completed the company's disposal programme, which landed it with a one-off charge of £140m.

Bradford & Bingley, Britain's biggest buy-to-let lender, sold its mortgage broker Charcol yesterday and predicted that full-year profits would be towards the top end of market expectations. The sale completed the company's disposal programme, which landed it with a one-off charge of £140m.

Charcol was sold to a management buyout team backed by a group of investors including Advantage Capital, a UK-based private equity group, for an undisclosed fee.

James Leal, at Teather & Greenwood, said: "The price may have been less than hoped but at least the distraction of the disposals is now over."

B&B said analysts' forecasts for annual trading profits ranged from £249m to £279m. Steven Crawshaw, the chief executive, said: "Everything has gone a bit better and faster than everyone was expecting. The lending business has done a bit better than analysts were expecting."

He said the unit sales announced in May were due to be completed by Christmas but have happened more quickly than anticipated. That means that costs will be cut by £35m by the end of 2005, accounting for most of the planned £40m reduction by the end of 2006.

B&B has sold five non-core assets to focus on niche mortgage lending and the sale of simple financial products. It will cut 600 jobs by the end of the year as part of its drive to slash costs and strengthen its position in the intense competition among high street banks. B&B recently announced a tie-up with Legal & General, and will sell L&G life insurance and investment products from next year.

The former building society became a public company in 2000 and tried to diversify into financial broking. However, after a sales slump last year, the company decided to get out and focus on specialist lending.

B&B said mortgage lending had slowed in the second half as the housing market cooled and new mortgage regulations were introduced.

While margins have been maintained in the specialist lending products, the group's net interest margin has continued to decline.

Mr Crawshaw was optimistic about next year, predicting a "gentle slowdown rather than a big crash" and house-price inflation of 2 per cent. He said: "The mortgage market will be slower but will continue to grow." Demand in the buy-to-let market would be supported by a stabilisation of house prices, he added.

The shares rose 10p to 285p.

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