Bradford & Bingley, the nationalised mortgage lender, said yesterday that its first-half pre-tax losses had soared to £160m from just £26.7m in the first half of last year.
The stricken lender, which is being run down by the Government, said the reason for the loss was an alarming rise in bad debts, which rose to £328.4m from just £75.6m a year earlier.
The lender's £40.3bn loan book is now being run down, and the deposit business has been sold off to Banco Santander of Spain.
In its statement yesterday, Bradford & Bingley reported a sharp rise in mortgage arrears. Cases three months or more in arrears, or in possession, equated to 5.88 per cent of its mortgage accounts – more than double the figure for the same period last year. The figures were sneaked out late on Friday, when many in the City had already left for the weekend.
The Financial Services Compensation Scheme has provided Bradford & Bingley with an £18.4bn loan, which will be recouped as customers repay their mortgages. That limits losses to the taxpayer, because although the money to fund the loan came from the Government, the FSCS will pay that back through a charge levied on other banks.
However, the taxpayer has also extended £8bn to Bradford & Bingley to cover working capital, up from £2.4bn last December, as a result of short-term funding being repaid.
Losses will initially be absorbed by the £2.6bn capital buffer the bank has in place. Despite the gloomy figures, Richard Banks, Bradford & Bingley's managing director, said the lender was "on track to deliver on its business plan priorities, which will enable it to repay HM Treasury and the FSCS".Reuse content