B&B to sell estate agency and advice arm
Thursday 20 May 2004
Bradford & Bingley will sell its independent financial advice and estate agency businesses as part of a major change of strategy, its new chief executive said yesterday.
Stephen Crawshaw, who has been in the top job for just six weeks, said he wanted to reduce costs by £40m annually by the end of next year, by focusing the former building society on specialist mortgage lending, such as buy-to-let, and selling a range of relatively simple financial services products through its branches.
The move is a significant climbdown from the strategy of B&B's former chief executive, Christopher Rodrigues. He attempted to carve a niche for the business among its much larger rivals by trying to roll out high-quality independent advice to a wide range of customers.
That strategy, Mr Crawshaw has decided, does not work. While the IFA, John Charcol, in particular is a respected business, it does not generate significant profits. In comparison, B&B's specialist lending business contributed 80 per cent of its profits last year.
The announcement was welcomed by the stock market. B&B's shares rose 6 per cent to 283.75p, due partly to renewed speculation that the business would be a bid target.
The businesses which Mr Crawshaw has decided are "non-core" could be sold off separately, with Charcol possibly being snapped up a consortium of venture capitalists plus its former management. Ian Darby, the former managing director of Charcol, might lead a management buy-out.
The insurer Aegon is thought to have contacted Goldman Sachs, which is advising B&B about a possible deal. Meanwhile, the estate agency business could be consolidated within a larger chain, such as Countrywide.
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