Bradford & Bingley interest in Northern Rock assets

by Gill Montia

Story link: Bradford & Bingley interest in Northern Rock assets

Bradford & Bingley (B&B), a leading provider of buy-to-let mortgages, is reported to have approached Northern Rock with a view to acquiring some of the troubled bank’s assets.

It is understood that B&B is not interest in buying the entire business but that it could become part of a rescue consortium.

Bradford & Bingley currently has concerns over its liquidity and analysts suggest that its mortgage portfolio is actually more risky than Northern Rock’s because over 50% is in the buy-to-let sector and 20% is self-certified.

As a result, Bradford & Bingley’s shares have fallen 35% in value since the credit crisis began in August.

In November, the lender sold £4.2 billion of its best quality loans to ease its problems.

Despite its difficulties, Northern Rock’s mortgage book is regarded as high-quality and could stabilise Bradford & Bingley’s loan book.

Yesterday the Bank of England guaranteed some of Northern Rock’s obligations on the wholesale money markets, increasing the UK taxpayers’ exposure to the bank to around £56 billion.

While both Virgin Group and Olivant remain in the bidding for Northern Rock progress is slow and this week, a private sector rescue of the bank has appeared to be in jeopardy.