B&B to axe 600 jobs in cost-cutting drive
Bradford & Bingley is in the process of cutting 600 jobs as part of its drive to slash costs and strengthen its position amid the razor-sharp competition of high street banks.
B&B said yesterday it would remove 450 positions from its back office and processing staff by the end of next year. It has already reduced its head count by 150. The programme of redundancies comes a month after Steven Crawshaw, B&B's chief executive, unveiled a wide-ranging plan to redirect B&B's strategy, and to shave its annual costs by £40m.
Mr Crawshaw said: "The cost reduction programme has been accelerated, so we are anticipating taking £35m out in 2005 and the full £40m in 2006. Unfortunately, cost reductions brings with them the number of people employed."
He added that he had "not ruled out" compulsory redundancies, though the bank would try to reduce the head count through natural attrition.
Under Mr Crawshaw, who has been in the driving seat for just over two months, B&B will sell its independent financial advice and estate agency businesses to concentrate on its specialist mortgage lending and selling a range of relatively simple financial services products through its branches.
The sale of the non-core businesses had triggered "a great deal of interest" from potential bidders, though the process remained in its "early stages", Mr Crawshaw said.
The businesses could be sold off separately and there has been speculation that its independent financial advice business, Charcol, could be bought by a consortium of venture capitalists plus its former management. The insurer Aegon is also thought to have contacted Goldman Sachs, which is advising B&B about a possible deal.
Mr Crawshaw said a single deal to sell the entire portfolio would be "clean", but added it had to be balanced against the price that would be achieved. "In principle a single transaction is preferable to five complicated ones," he said.
In a trading statement, which sent B&B's shares 6.5p higher to 277.25p, the bank also said that its profit margins were under pressure because of the higher funding costs for its mortgage book. On the health of the housing market, B&B said the warnings in the media about possible falls in house prices, plus the interest rate rises in recent months, had already dampened the price sellers were able to get for their properties.
But it added that in its own specialist field of buy-to-let and self certification mortgages, confidence remained "strong".
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