Page last updated at 12:31 GMT, Sunday, 1 June 2008 13:31 UK

Bradford & Bingley chief resigns

Bradford & Bingley branch
Bradford & Bingley has targeted the buy-to-let market

The boss of Bradford & Bingley has quit "due to a serious cardiovascular condition", the firm has announced.

Chief executive Steven Crawshaw is leaving the UK mortgage lender with immediate effect, and will be replaced by chairman Rod Kent in the short term.

Mr Crawshaw's departure comes a day before a trading update and reports say the firm will issue a profit warning.

The firm has been hit hard by the credit crisis and is trying to raise 300m to boost its balance sheet.

In May, the firm said it would launch a rights issue in an attempt to help offset some of its weakening investment, having only a month earlier denied it would be seeking to raise funds.

Companies issue extra shares to raise money
They are offered to existing shareholders, usually at a discount to the current share price
Shares are offered in proportion to existing holdings, so if you own 10% of the old shares you are offered 10% of the new ones

The Sunday Telegraph said Bradford & Bingley was expected to say profits would "fall well below analysts' forecasts" of between 160m and 200m pre-tax.

And the Sunday Times reported the profit warning "is expected to be contained within the bank's rights-issue document" which is to be sent out this week.

US housing slowdown

B&B saw its profits drop by almost half after writing down assets, including those linked to US mortgages.

Pre-tax profit fell to 126m in 2007 from 246.7m the year before.

As the UK's biggest buy-to-let lender, B&B has 20% of that market which has suffered following recent market turmoil.

Banks worldwide have seen huge losses linked to problems in the struggling US housing market.

Problems started when borrowers in the US, with no or limited credit history, started to default in large numbers once interest rates became too high.

Many of those loans to so called sub-prime borrowers had been grouped together, repackaged and sold on to banks as an investment with high returns worldwide.

B&B, like other banks, has been asking for bigger deposits and raising its interest charges for new products.

The firm recently warned of a rise in mortgage arrears as borrowers found it harder to repay loans.

Competitors have also sought rights issues in an attempt to raise funds.

Royal Bank of Scotland is seeking to raise 12bn while HBOS wants to raise 4bn.

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