B&B takes big hit on loans, but less of a slide into red

THE state-owned lender Bradford & Bingley posted annual losses of £196 million as write-offs on bad debts and fraud almost doubled.

Although the slide into the red was less than 2008's 278m reverse and a better result than expected in its business plan, the firm took an 884.1m loan hit – up from 467.7m the previous year.

Of this, 388.4m came through provisions for fraud and professional negligence, which the former buy-to-let specialist said mostly related to property valuations during the housing boom.

B&B is running down its mortgage loan book after being rescued by the taxpayer in September 2008, when its savings business was sold to the Spanish bank Santander.

Managing director Richard Banks said B&B had made "substantial progress" against its business plans.

Although 5.54 per cent of its 38 billion loan book is in arrears, this is lower than the 5.88 per cent in the first half of 2009 thanks to lower interest rates and almost 100 extra staff focused on collection.

The downward trend has continued so far during 2010 with arrears performance "better than anticipated", B&B said.

The lender made more than 12,000 special arrangements to help customers who were falling behind with repayments last year, as well as supporting tenants left high and dry after buy-to-let investors went bust.

The lender's annual report also revealed a bonus tax liability of 37,000 after eight employees at B&B – including one director – earned bonuses totalling 274,000 for 2009.

The payouts will be deferred for three years while Banks voluntarily deferred the first 10,000 of a 30,000 bonus which would have been payable this year.

B&B traces its history back to 1851, but it was formed in a 1964 merger that brought together the Bradford Equitable Building Society and the Bingley Building Society.

The company demutualised to take bank status in 2000, but was brought to its knees by the financial crisis.

• The former chief executive of Anglo Irish Bank was released without charge yesterday after being questioned about alleged financial irregularities.

Sean FitzPatrick, the former chairman and chief executive of the now nationalised bank, was arrested during a dawn raid at his luxury home in Greystones, Co Wicklow, south of Dublin, on Thursday morning.

The 61-year-old was questioned by fraud squad detectives for about 24 hours before being released from Bray Garda Station.

The detectives – who were granted an additional 12 hours to hold FitzPatrick after an initial 12-hour period had elapsed – are now preparing a file on the case for the republic's director of public prosecutions.