Page last updated at 17:33 GMT, Friday, 29 August 2008 18:33 UK

Bradford & Bingley announces loss

Bradford & Bingley branch
Bradford & Bingley has been hard hit by the credit crunch

Bradford & Bingley (B&B), a buy-to-let loans specialist, has reported a loss for the six months to 30 June, with impairment charges up sharply.

B&B reported a loss of 26.7m for the period, against a 180.4m profit last year, and said it remained "cautious".

Credit impairment charges for the six months rose to 74.6m, up from 5.3m in the same period last year.

B&B recently completed a 400m share rights issue in order to improve its balance sheet.

B&B's shares closed down more than 2% at 49 pence.

Access to credit

"As a focused business within a sector that is currently going through a cyclical downturn, Bradford & Bingley has experienced a particularly challenging first half," said the lender.

"We have witnessed unprecedented financial dislocation, with wholesale medium-term funding markets being difficult to access since last summer".

B&B's rights issue had to be restructured twice after initially failing to attract sufficient interest.

Private equity firm Texas Pacific Group (TPG) had been about to invest in the bank but it withdrew when credit agency Moody's downgraded B&B's debt rating.

B&B's impairment charges for the first half of 2008 soared largely as a result of a rise in the number of mortgages in arrears for three months or more.

The lender said has seen arrears increase and said it "anticipated this trend to continue throughout the second half".

The firm said it was taking steps to detect early arrears cases and improve collection.

'Favourable conditions'

Looking ahead, B&B said it would focus on higher quality loans and maintain a "prudent approach to funding".

While the bank is still going to focus on the buy-to-let market, it said it would reduce the volume in the second half until "more favourable conditions return".

In June, Steven Crawshaw resigned from his role as chief executive due to health problems. He was replaced earlier this month by Richard Pym, the former head of Alliance & Leicester.

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