UK mortgage lender Bradford & Bingley shares drop near 30%!!

UK mortgage lender Bradford & Bingley shares drop near 30%!!

news.sky.com

Shares in mortgage lender Bradford & Bingley have plummeted 30% this morning after the bank issued a profits warning and confirmed a deal with a US private equity company.

The company has been hit hard by the credit crunch, with profits suffering in the face of the housing market downturn and the soaring cost of borrowing on wholesale money markets.

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The media hasn't been "the sky is falling" like over Northern Rock, which caused a run on the bank.

But, I have to say, it was reported last summer that Bradford & Bingley could become the next failed bank in the UK. Same business model as Northern Rock

news.sky.com
(visit the link for the full news article)

Bradford & Bingley - Share Chart over a year period

Good thing I sold my shares in them last October then

Originally posted by selfisolated
Good thing I sold my shares in them last October then

Yeah, it was good.

The Bradford & Bingley shares are now down -25%, many expect medium size banks in the UK to face troubles like B & B and even Northern Rock. Whispers inside the UK government felt another bank is expected to fail soon :S

Correct me if Im wrong, but isnt B&B only a mortgage company?

Northern Rock had customers and depositors on their books, which is what caused the government to step in and bail them out... saving the government's face at taxpayers' expense.

However if B&B were to go kaput, the game would be up for them... no bailout this time we can presume since they are solely a mortgage company.

Originally posted by 44soulslayer
Correct me if Im wrong, but isnt B&B only a mortgage company?

Yep, based on the buy to let model.
Alliance & Leicester have the same system in place too. Another bank the City has tagged for potential problems.

So if I hold a mortgage with a company that goes bust - whats the script?

Who do I owe the money too? Can the administrators call in the mortgage since I'm a debtor?

S.

reply to post by Smokersroom


Well, it hasn't gone bust just yet but I think that would very much depend upon the deal that was made for whoever took over the bank. I also think that the contract you signed when you took out the mortgage would also still be valid, so they can't simply send you a letter demanding you pay off the rest of your mortgage immediately as far as I'm aware.

I doubt there will be another government bailout for any bank really. We can't afford it. I wonder if the big financial companies will learn any lessons from this, or will it be business as usual when the credit crunch ends?

Originally posted by Smokersroom
So if I hold a mortgage with a company that goes bust - whats the script?

Who do I owe the money too? Can the administrators call in the mortgage since I'm a debtor?

S.

I'd say that B&B owe on th $$$ they packaged as mortgage products. Who ever that is. They would then own the "assets" of B&B, which in this case is those mortgages. try and find out who underwrote them.

[edit on 2-6-2008 by atlasastro]

Originally posted by Smokersroom
So if I hold a mortgage with a company that goes bust - whats the script?

Who do I owe the money too? Can the administrators call in the mortgage since I'm a debtor?

S.

Indubitably they will call in the mortgage.

The ridiculous system of a bank going bankrupt is that debtors are reeled in hard and fast; and creditors (ie those with a bank balance) are told to bugger off.

Well, as my chart has shown, within a single year B&B has lost nearly 80% of its share rating.

Many of the medium banks in the UK will not be able to operate under the credit crunch, most of them were created during the last 10 year economic boom.

reply to post by infinite


This short termism is endemic across the UK; in government, in business and in personal finances. People didn't put aside money during the good times and now they don't have much during the bad times. With luck, excessive borrowing will be a thing of the past and people will learn to live more within their means.

I find it bitterly ironic that the credit boom rocketed off in the 1980s under Margaret Thatcher, a leader who wanted 'Victorian values' of thrift, hard work and savings. The public had other ideas.

YIKES!

Bank Boss Warns Of Coming Recession



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[edit on 2-6-2008 by infinite]