B&B hit by sub-prime losses

Steve_xx

Lender Bradford & Bingley (B&B) has reported a sharp fall in profits after cutting the value of risky assets following the recent market turmoil.

B&B's shares tumbled in London on the news, sliding 12% to 214.5 pence.

Here's a link to the story:

http://news.bbc.co.uk/1/hi/business/7242205.stm

tradetime

This was strongly rumoured in the aftermath of the NR debacle, so shouldn't really come as a great surprise to anyone, perhaps it will refocus the bash everything banking foreign to look closer to home. There'll be plenty more of this to come. Let's just hope the UK property market holds up long enough for the worst of the US shockwaves to discipate.

Wurz

Oop's, and there was me about to buy either their 6 month fixed rate bond @ 6.5% or the yearly @ 6.2% having pulled my money from Scottish Widows who managed to plummet my £104,500 Bond to just £91600 over the past year. Most of it during December '07/January this year.

I have had a "bank account" with B&B since they launched such accounts during the early 80's (don't do them now!) where my salary is paid to. Humm, might have to review that. Mind you, I still get a wry smile when some of the B&B staff when they see my ATM card (issued with the account) and realise that the card is older than them, and still works!

Lloyds are doing a 6 month fixed interest bond @ 6% or £4 per thousand invested and as much as I don't like Lloyds after they sold me the Scottish Widows product, my wife & I have a joint account with them that currently has the bulk of our dosh sitting in it. At least a "joint" is safe to £70k.

Anyone got better ideas for (safe) monthly income?

purch

Barclays are the first of the big Banks to report next week !! :eek:

That will be a pivotal moment for the Banking sector and the UK Stock Market in general !!!!! :cool:

Biggles

But underlying profit before tax up 5% and total dividend up 5%.

Rafter

Wurz,

Depends how risk averse you are.

Lloyds and HSBC are probably the two safest UK banks because they are better capitalised, are well diversified and because their 'capital markets' operations are less significant than RBS or Barclays so the skeletons in the closet are certainly less.

The other area you could look at is the building societies. They generally stick to traditional mortgages and have never lost their savers money according to the recent chelsea building society results announcement.

Their bonds don't normally pay monthly income but I'm sure you can find some who do.

If you do any travelling overseas it might be worth getting a Nationwide current account as you will save around 3% on the conversion rate. Even supposedly commission free foreign exchange from the post office or M&S will still charge you more to buy foreign money than the Nationwide conversion rate if you use your debit card abroad.

Good luck

R.

Wurz

Hi Rafter,

Thanks for sentiments. As to risk averse, well after the ScotWids 4 year investment that was supposed to be low risk, I'm of a mind to be "no risk" at present.

I hear your comments about Building Societies, and have looked at what's on offer. But of course, Bradford & Bingley are a seemingly "hybrid" type, part bank, part Building Soc. As to their risk, well, who knows at present? Certainly their offer of a 50/50 split on your money with a one year fixed interest bond paying 8.2% coupled with a five year one with Legal & General where you take market risk and are tied in has received derisive comments on other posts.

For the sake of a half percent it may well be safer with Lloyds @ 6%. Certainly better than SWids which only made about 2% over 4 years if you take the monthly income into the equation!

At least this way I can re-evaluate in 6 months time with no loss of capital.

Rafter

Wurz,I'd be very cautious wading in to an index linked bond at a monent in time in the currently very turbulent stock market.You might win by picking the low point, but the worse could yet be to come.I'd stick with cash based savings, use your ISA allowance if you want stock market exposure and then at least the tax benefit works in your favour.Bradford & Bingley were a building society but are now a mortgage bank.They borrowed far more from the city than a building society would.They also took some risks with their cash investments searching for higher profits (and bonus' for their directors). It turns out that these investments backfired (being held in securities linked to junk mortgages) and they have lost a lot of money.Personally, I think B&B are too big to be allowed to fail and they are still a well capitalised profitable bank with cash enough to fund their business so not in Northern Rock teritory. They probably need some new directors though as their shareholders have lost a lot from some unwise decisions.R.

maypole

WURZ does the £35000 each in a joint account apply for safety reasons? I am not so sure, you had better check. I thought you had to have seperate accounts. I might be wrong though.

10_66

It's £35K per person with one company, £70K if a joint account.

Wurz

Yup, that's what I've just been told, a joint account is covered to £70k.

Interestingly when I popped in to my local Lloyds this afternoon they had not heard of the 6 month 6% fixed rate and had to go on-line to verify. It has only just come out was their excuse.

Their on-line saver where we put £90k after we cashed in SWid's is currently paying a net £321, and the rate can vary, so transferring to the 6 month deal will, after tax, give us more at £360. I think we'll pop in tomorrow (my wife has to also sign the paperwork) unless anything more tempting comes up overnight.