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Protect local jobs in wake of tragedy says MP
Bradford & Bingley rescue
JOBS
Peter Edwards
BRADFORD & Bingley's jobs in Yorkshire should be protected before those in other parts of the country after its "tragic" nationalisation, said the MP whose constituency includes its headquarters.
Philip Davies, Conservative MP for Shipley, which includes the lender's Bingley base and its Crossflats office, called on the Government to give priority to workers in this region in way that Lloyds TSB had sought to safeguard Scottish jobs after its 12.2bn takeover of Halifax Bank of Scotland.
The nationalisation of loss-making B&B, expected to be confirmed before the stock market opens this morning, will end more than 150 years of independence and has prompted fears of major job losses in the region. Earlier this year mortgage lender Northern Rock announced plans to axe 2,000 jobs – about a third of its staff – after it was nationalised but many will remain in the North East.
Mr Davies said yesterday: "As the Government attempts to retain Northern Rock jobs in Newcastle and then HBOS jobs in Scotland I want to see them protect B&B jobs in Yorkshire.
"You cannot underestimate the importance of B&B to the local economy. Any job losses will have a very major impact.
"The employers must be worried sick. Everybody who works there will feel their job is at risk."
Heavy job cuts by B&B would have a dreadful effect on West Yorkshire as it tries to come to terms with the takeover of HBOS, whose retail division is based in Halifax, he added.
Last week Lloyds TSB bosses refused to give guarantees over the future of thousands of HBOS jobs in Yorkshire after talks with the Government, although staff have been told "the majority" are likely to stay. HBOS chief executive Andy Hornby has said some job reductions are "inevitable".
Mr Davies said: "The effect of HBOS and B&B together could have a devastating effect on West Yorkshire. It's incredibly sad as it is people's jobs.
"Bradford & Bingley has a fantastic heritage in the area and it is absolutely tragic to see it in the state it is in."
He said he would have preferred to see a Bank of England-led reconstruction package, as proposed by Shadow Chancellor George Osborne.
Ann Cryer, the Labour MP for Keighley, said her constituency had people who worked for HBOS in Halifax as well as many B&B employees.
"My constituency in my view is very vulnerable in the present economic climate," she said.
Ms Cryer said she would be "delighted" if B&B were nationalised. "I much prefer nationalisation to instant death, which is what has happened with some of the American banks and what do you feel if that is your constituency and hundreds of jobs are just gone in minutes?" she said.
"It is just a time-keeping measure to ensure jobs. They just have to put it on hold for a bit to ensure all those jobs at Bingley."
She said she was worried that the area had been overlooked during discussions about the planned Lloyds TSB takeover of HBOS. "Everybody seems to be concerned with saving jobs in Edinburgh but I am concerned with Halifax," she said.
Ms Cryer said she believed Lloyds TSB may outsource some jobs to India and that B&B workers could face the same threat.
"I do not want the Government selling off bits of Bradford & Bingley to companies who in turn are moving jobs offshore to India," she said.
The UK Shareholders' Association criticised the Government as well as the board of B&B.
Spokesman Roger Lawson said the 400m rights issue had been designed to prevent the need for such a bailout. The cash call concluded in July, after being restructured twice, with only one-in-four shareholders taking up their options, leaving the underwriters with a massive bill.
"I cannot see how it has changed in just two months. The money raised was supposed to last for a year or two. It does not make sense for the company to claim they are in an impossible situation (now]."
Mr Lawson said the UKSA may ask the Financial Services Authority to investigate the rights issue to establish whether it had given a full picture of the financial state of B&B.
He also said of the decision to nationalise: "It is a typical Labour Party approach. Why are the directors going along with it? They are not consulting shareholders. Shareholders will end up with nothing."
Kris Hopkins,Tory leader of Bradford council, said he was "extremely concerned" that local people would suffer.
He said the city had a "significant number" of HBOS employees who had already seen several weeks of uncertainty.
"We have seen two major banks which are based in the district, or are very close to it, be undermined. We have got to think about the local impact."
Bowler-hatted city gents were a symbol of successful merger
HISTORY
Andrew Robinson
IT HAS been a bank for only eight years but Bradford & Bingley's roots go back more than 150 years.
Before it was listed on the London Stock Exchange in 2000, it was one of Britain's best known building societies, with its distinctive logo of two bowler-hatted city gents – Mr Bradford and Mr Bingley.
Using the two characters was a nod to the 1964 merger of the Bradford Equitable Building Society and the Bingley Building Society, two West Yorkshire institutions established in 1851 to help local people save and get loans, often to buy a home.
By the early 1960s the Bradford had 22 branches and the Bingley had more than 30. Their amalgamation in 1964 created the nation's eighth largest building society.
The characters of Mr Bradford and Mr Bingley were created and remained for more than 30 years.
Legislation in the 1980s allowed banks to offer mortgages, which had traditionally been the preserve of building societies, but also allowed the societies to extend their services.
Building societies were also allowed to abandon their mutual status and some, including Abbey National, did so quickly. Woolwich, Alliance & Leicester, Halifax and Northern Rock followed suit.
Bradford & Bingley stayed as a mutual but took advantage of new freedoms to shift focus to include retail services including offering financial advice.
By 1999, it was the second largest building society in Britain, with 2.5 million members and specialised in mortgages for the buy-to-let market.
In July 2000 its voting members overwhelmingly endorsed a proposal from the board of directors to convert to a public limited company, Bradford & Bingley plc.
Two years later, the bank's image was updated when advertising agency M&C Saatchi retired Mr Bradford and Mr Bingley and gave their bowler hat to a young woman in a green suit.
She whispers "Aren't hopes and dreams fragile? But they could happen with Bradford & Bingley."
Its message is aimed at first-time buyers, the self-employed and those who want to buy a property to rent out.
But now the bank, which was the eighth largest lender of new mortgages in Britain last year, is looking rather fragile itself.
In February it announced that its annual profits had slumped by half and reported a steep rise in mortgage arrears and bad debts.
The collapse of the mortgage market has seen its share price fall sharply in recent days and 370 of its 3,000 staff have lost their jobs.
Jobs under threat for workers across region
CRUNCH CASUALTIES
Alexandra Wood
THE credit crunch has brought uncertainty to the jobs market in Yorkshire.
Several hundred jobs are at risk at Bradford & Bingley's head office in Yorkshire. However, 70 jobs are to be created in Bingley to help collect bad debts.
HBOS employees in Yorkshire, including 6,000 staff at its Halifax HQ, have been left fearful for their jobs following its takeover by Lloyds TSB.
Yorkshire textile retailer Rosebys went into administration last Thursday, with more than 2,000 staff facing the prospect of redundancy. Over 250 staff are based in Yorkshire. Huddersfield-based Motor World has also called in insolvency accountants following a dramatic downturn in sales.
Sheffield Homes, an arm's-length management organisation, owned by Sheffield Council, says 100 employees could lose their jobs by next March, with a further 100 facing redundancy in the following 12 months.
Two hundred workers at bus manufacturing company Optare, which is closing its factory at Hellaby, Rotherham, are facing redundancy.
Discover Leisure, which employs about 640 people across the UK, said it intends to cut numbers to below 600, including some redundancies at its York branch and North Newbald head office.
Six hundred caravan workers in Hull and East Yorkshire are believed to have been made redundant since the credit crunch began.
Across the country 5000 construction job losses were announced in July, including 2,000 by York-based Persimmon.
In July Norwich Union said it was scrapping up to 500 jobs at its York offices.
Implications for savers and shareholders
QUESTIONS & ANSWERS
Q: What will happen today?
A: The Government is expected to take control of Bradford & Bingley to stop the lender's share price sliding further and to prevent a Northern Rock-style run. The Treasury was forced to act after no rival bank came forward to buy B&B because its 41bn mortgage book has a high proportion of "toxic" deals – where there is a high risk of the customers defaulting.
Q: Is the money in my account safe?
A: Yes. Nationalisation will mean the cash in B&B accounts is guaranteed by the Government. Northern Rock savers received the same guarantee because it was the only way the Government could stop queues of worried customers forming outside branches.
Q: What will happen to B&B now?
A: It could be broken up after more than 150 years of trading. The Government may be forced to hold on to the mortgage book and to integrate it into its Northern Rock holdings.
Q: What about my shares?
A: Trading in B&B shares will be suspended as the Government takes control. It is not yet known what shareholders will receive if part or all of B&B is sold. B&B has about 937,000 small shareholders who make up 40 per cent of the bank. – many from Yorkshire.
Q: Why has the Government stepped in?
A: If B&B collapsed it could have sent the banking system into meltdown and ended the premiership of Gordon Brown, who built his reputation on economic competence.FINANCE GIANT'S YEAR OF TURMOIL
TIMELINE
January 2: Shares valued at 278.5p
February 13: Annual profits of 126m – 49 per cent below previous year. Firm writes off 144.1m on investments.
April 13: Reports emerge that B&B is attempting to raise hundreds of millions from shareholders in a rights issue. B&B denies the reports
April 22: Bank says demand for buy-to-let mortgages is "robust". Shares at 163.5p
May 14: B&B asks shareholders for 300m in a bid to bolster balance sheet. New shares offered at 82p – a 48 per cent discount to the previous evening's close.
June 1: Chief executive Steven Crawshaw steps down because of ill-health. Speculation grows that company is about to issue profits warning.
June 2: B&B warns over this year's profits and said it had agreed to sell a 23 per cent stake to private equity firm Texas Pacific in a move to bolster its finances alongside a restructured rights issue, raising 400m in total. The new shares are priced at 55p as the group's then share price fell closer to the 82p "discount" price under the previous terms.
June 27: Investment firm Resolution – which offered alternative plans for a 400m fund-raising – walks away after B&B's board rejects proposals.
July 4: Texas Pacific pulls out of the deal to buy 23 per cent stake in B&B after the lender's investment status was downgraded by a ratings agency. B&B relaunches its rights issue plans for a second time – backed by major investors –- but its shares fall below 55p "discount" price.
August 18: B&B said 27.8 per cent of its new shares had been taken up by investors, but the group finally gets its 400m.
August 29: B&B crashes into the red in the first half of 2008. Pre-tax losses are 26.7m. Shares fall to 49p.
September 15: Lehman Brothers goes bankrupt. Inter-bank lending costs rise sharply, putting more pressure on B&B's funding costs. Shares fall to 31.5p.
September 21: Reports emerge that the Financial Services Authority is sounding out other banks over a takeover of B&B. Shares at 27.75p.
September 23: B&B rearranges onerous terms of a deal under which it bought mortgages from US financial services firm GMAC. These mortgages have been hit by rising arrears.
September 25: 370 jobs axed but fails to boost share price.
September 26: Bank of England announces more moves to free up money markets with extra funds. Shares in B&B fall to a record low of 16.5p during day, closing at 20p.
September 27: News breaks of talks over nationalisation.
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Saturday 11 February 2012
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