B & B shares - would you buy now?

Andrew64

fatpig wrote: »

Aren't they already? Anything less than £1 is a penny share?

I mean literally! The way they're falling they could be under 10p in a matter of weeks.

Andrew64

See this article:

http://www.latimes.com/business/la-fi-wamu26-2008sep26,1,7648045.story

This bank, Washington Mutual, was in exactly the same position as B&B is now. The US equivalent of FSCS (FDIC) has just seized the bank and sold it to another bank. As a result it appears that the shareholders will get nothing! I suspect this would be the case if the UK authorities had to take over B&B. Quite why anyone still has B&B shares is a mystery to me. Also note that WM suffered a huge run in the last 2 weeks. Any sign of such a thing at B&B? Not like the NR run, but people reducing their deposits just to be safe - I know several people who have done just that, and I don't keep as much as I used to. I've spread my money around 3 other banks.

ad44downey

edwinac wrote: »

And for B&B depositors, that should be particularly disturbing..

Not really. Why would the government save Northern Rock and not B&B?

Northern Rock savers lost nothing. It's irresponsible of you to suggest B&B savers will lose anything

bristolleedsfan

Andrew64 wrote: »

Today, 2:25 AM I mean literally! The way they're falling they could be under 10p in a matter of weeks.

Not long now and you will be able to go to sleep at night again.


Date: 26/09/2008 I Last trade: 11:05 BST

Current price19.25

a7man

If they reach 10p I'll prob buy some as a long term investment.

pizzagirl

I wouldn't do that if I were you. You'll end up with nothing like Northern Rock shareholders did

Plasticman

a7man wrote: »

If they reach 10p I'll prob buy some as a long term investment.

:rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl:

sabretoothtigger

Under pressure buy-to-let mortgage specialist Bradford & Bingley (LSE: BB.L - news) has freed itself from the long-term arrangement of buying loans from General Motors (NYSE: GM - news) ' mortgage unit GMAC (NYSE: GOM - news) -RFC.

Bradford & Bingley has renegotiated the terms of its mortgage forward sale agreement with GMAC-RFC.
Under the new terms, Bradford & Bingley will acquire £500m of loans from GMAC-RFC in the fourth quarter of 2008, and between £225m and £250m in the first quarter of next year, after which the agreement will cease.
At the point of termination GMAC-RFC will receive, in lieu, the equivalent of the premium that would have been paid had the agreement run the full term.

The original terms of the agreement had Bradford & Bingley committed to purchasing a minimum of £350m of UK mortgage assets per quarter, with £1.75bn of loans scheduled to be purchased before the end of 2009.
Bradford & Bingley entered into the agreement with GMAC-RFC back in December 2006 as part of a general policy to buy in loans from other providers in an attempt to ramp up its mortgage business in a hurry.

The quality of the loans acquired from outside sources proved to be lower than those already on Bradford & Bingley's books, with the three-months arrears rate on the bought-in loans running at 5.11% in August versus a rate of 1.7% for loans approved directly by Bradford & Bingley. The arrears rate for the loans bought in from GMAC-FRC is not known, but GMAC-RFC is "working closely with Bradford & Bingley to improve the small element of the books acquired that are not performing as expected," a spokesperson said.

The low quality nature of its loans prompted Bradford & Bingley to write down the value of the loan book by £102m. The bought-in loans are believed to account for around one quarter of the former building society's loan book.
"We are pleased to have reached this agreement which provides GMAC-RFC with certainty in this market, both by providing a secure exit of the loans it has originated and in terms of the equivalent premium that would have been paid should the agreement have run the full term," GMAC-RFC said, adding: "This fits with our strategy going forward in the UK market."

...................

B&B strikes Barclays support deal

By Jane Croft, Retail Banking Correspondent
Published: September 24 2008 23:32 | Last updated: September 24 2008 23:32

Bradford & Bingley, the embattled mortgage lender that has been downgraded to one notch above junk status by Moody’s, on Wednesday struck a deal with Barclays to act as a counterparty for its covered bond programme.
B&B was forced to look for a new interest swap provider to stand behind its covered bond programme following an earlier ratings downgrade in July.

Moody’s downgrade meant B&B was forced to find a third party with a higher credit rating to fulfil the role.
Covered bonds are usually backed by mortgages and are normally seen as ultra-safe because they are also guaranteed by the issuing bank.

B&B has been under mounting pressure in recent days because of the difficult wholesale markets after it was downgraded by Moody’s, Fitch and Standard & Poor’s amid fears about its rising arrears.
B&B’s credit default swap spreads – a guide to the risks for debt market investors – yesterday rose to 812 basis points, double that of a month ago.

Because B&B is only 43 per cent funded through retail deposits, a downgrade to junk status would make it tougher to access wholesale funding and could lead to equity investors abandoning the stock.
Possible triggers for a downgrade could include a profit warning if arrears were to deteriorate further.
S&P said that its downgrade reflected the view that “constraints on B&B have increased materially in recent weeks, although liquidity is currently strong”.

It believes that concerns over asset quality in B&B’s loan book – which is 85 per cent made up of self-certified and buy-to-let loans – “mean that wholesale unsecured lending markets are effectively closed to B&B and as a result this source of funding has substantially declined”.

However, B&B shares rose ¼p on Wednesday to 25p after it struck a deal to avoid taking an additional £1bn in mortgages on to its balance sheet and renegotiated its agreement with GMAC-RFC, the UK arm of the US financial group. Under the original deal with GMAC, B&B was committed to absorbing mortgages worth a further £1.75bn by the end of 2009.
Instead, B&B will now take mortgages worth £500m by the end of the year and a further £225m-£250m in the first quarter of 2009.

Arrears on the GMAC mortgages have turned out to be significantly higher than on B&B’s own book, adding to concerns about the bank’s capital position.



However, B&B shares rose ¼p on Wednesday to 25p after it struck a deal to avoid taking an additional £1bn in mortgages on to its balance sheet and renegotiated its agreement with GMAC-RFC, the UK arm of the US financial group.Under the original deal with GMAC, B&B was committed to absorbing mortgages worth a further £1.75bn by the end of 2009.
Instead, B&B will now take mortgages worth £500m by the end of the year and a further £225m-£250m in the first quarter of 2009.

Stavros_3

So what does that long winded post mean in pigeon English

sabretoothtigger

They took some positive steps but are still buying even more bad debts

Bradford & Bingley starts job cuts as hopes fade of rescue bid

Patrick Hosking, Banking and Finance Editor

Bradford & Bingley began to cut one in seven employees yesterday as it tried to convince an increasingly sceptical stock market that it had an independent future.
The embattled mortgage bank revealed plans to sack 370 people and announced further bottom-line losses of £134 million after cleaning out its toxic assets portfolio. Shares in the bank, which is grappling with a flood of buy-to-let mortgages turning sour, slumped by 15 per cent to a new closing low of 21p.
Hopes of an immediate white knight bidder receded, with analysts suggesting that no one would be prepared to take on B&B's uncertain £40 billion loan book.
Banco Bilbao Vizcaya Argentaria, Banco Santander of Spain and ING of the Netherlands had been mooted as possible rescuers.
Related Links

• Rating downgrade batters B&B shares

• FSA fails to find saviour for B&B

The Financial Services Authority, while extremely concerned, is thought to feel it does not have to step in unless there is an imminent danger of a run by depositors. B&B is strongly capitalised and has access to the Bank of England's Special Liquidity Scheme, which means it could limp on for some time. B&B believes it has sufficient liquidity to last until the end of next year.
Its mortgage processing centre in Borehamwood, Hertfordshire, will close early next year with the loss of 300 jobs, and 50 mortgage advisers in the branches will go, as well as sales staff. B&B said that it needed to make the cost savings because it was receiving far fewer mortgage applications.


Richard Pym, the chief executive parachuted in last month, said that the job losses were regrettable, but added: “We are planning to put the problems of the past behind us and have a business which is fit for purpose going forward.” The problems include downgrades in the past few days of B&B's credit rating, leaving its standing in the money markets just one notch above “junk” status - a near impossible situation for a deposit-taking institution.

On Wednesday it was forced to bow out of acting as counterparty on some transactions in the wholesale markets and had to ask Barclays, a better-rated bank, to take on the risk.

The bank said that the job losses would shave £15 million a year from its costs for an upfront cost of £14 million. It is boosting staffing levels in mortgage arrears collection but gave warning that the head office workforce in Yorkshire will be cut at a later date.

B&B has been hit by rocketing numbers of customers defaulting on their mortgages or falling behind on interest payments. It specialises in lending to buy-to-let landlords and to higher-risk “self-certified” borrowers, those who have not had to provide proof of income to qualify for loans.
The shares are now far below the 55p price at which the bank raised emergency capital in the summer.
Jonathan Pierce, an analyst at Credit Suisse, said: “The form of any potential resolution is unclear. Ultimately, B&B's biggest issue is asset quality and we doubt any major bank will want exposure to a £40 billion mortgage portfolio with arrears almost double the industry, and where over 40 per cent of loans will be in negative equity if house prices fall 30 per cent peak-to-trough, on our estimates.”

http://www.ft.com/cms/s/0/54852d4a-8b99-11dd-8a4c-0000779fd18c.html

http://uk.biz.yahoo.com/080923/214/i7ba9.html

http://clkuk.tradedoubler.com/click?p=58398&a=1157537&g=16785330&url=http://www.ft.com/cms/s/75d00556-8a86-11dd-a76a-0000779fd18c,s01=1.html

http://clkuk.tradedoubler.com/click?p=58398&a=1157537&g=16785330&url=http://www.ft.com/cms/s/2a902d98-8b3d-11dd-b634-0000779fd18c,s01=1.html