Blackfriar: B&B’s shattered nest eggs deserve some proper scrutiny

Pre-tax profits for the first six months of the year surged to £152m from £83.6m a year earlier. Its charge for bad debts dropped by £117.4m to £44.1m.

The number of Bradford & Bingley mortgages in arrears by at least three months fell to 3.6 per cent from 4.1 per cent at the end of 2010.

But Blackfriar sees little cause for celebration, for this is no ordinary bank.

The carcass of 231,000 buy-to-let mortgages is what remains of the once proud former building society, which was carved up in September 2008, when Santander bought its deposits and branches and the taxpayer took on the rest.

Bradford & Bingley’s debt to the taxpayer still stands at £27bn, while Northern Rock owes £20.7bn. Crucially, Bradford & Bingley, the country’s biggest buy-to-let lender with a £35.4bn loan book, has yet to repay the taxpayer a penny of this.

Its arrears rate, although falling, still far exceeds the Council of Mortgage Lenders’ industry average of 2.09 per cent.

So the Financial Services Authority’s insistence that no inquiry is needed into its collapse leaves Blackfriar scratching his head.

Upon launching a long-overdue probe into the collapse of Halifax Bank of Scotland, FSA chairman Adair Turner ruled out an investigation into Bradford & Bingley.

“We have considered whether similar public information reports should be published in relation to other firms that failed in the crisis,” he wrote in a letter to Treasury Select Committee chairman Andrew Tyrie. “We believe not.”

In Mr Turner’s view, “a bank failure does not itself constitute regulatory failure”.

“We should not therefore establish the precedent that all bank resolutions are followed by public reports,” he added. “None of the other institutions that failed in 2008 was of the scale of RBS and HBOS.

“None is therefore likely to reveal lessons essential to our understanding of the causes of the crisis nor of the steps needed to ensure better regulation and supervision for future.”

After the furore over the RBS report, the FSA has started to realised the extent of public anger over this absence of transparency. Blackfriar welcomes the probe into HBOS’s failure, but this does not go far enough.

While Blackfriar accepts that the City watchdog has more than enough on its plate without having to dig up and publish the reasons behind the collapse of every financial institution, he cannot accept that Bradford & Bingley’s demise does not warrant thorough analysis.

This is a bank that destroyed the nest eggs of thousands of shareholders, many in Yorkshire and many of these former employees.

This is a bank that departed so far from its building society roots that it was nationalised just eight years after its demutualisation.

This is a bank that was allowed to embrace the buy-to-let mortgage market to the extent that 99 per cent of its mortgages are held by this narrow and fickle slice of borrowers.

While the bulk of them may be keeping up with payments on their mortgages now - as interest rates remain at a record low – repaying mortgages on their second, third and fourth homes will undoubtedly fall down the pecking order when rates rise.

Everything, from sales practices to bonus payments, should be laid bare in a detailed report so lessons can be learned about its collapse. Blackfriar believes failing to do so leaves the taxpayer short-changed.

Blackfriar bids farewell to Mike Humphrey, the straight-talking chief executive of Croda.

Mr Humphrey, who is standing down in January after 42 years with the Goole-based natural chemicals group, leaves behind an enviable legacy.

He started out in a factory and rose through the ranks to head what is now Yorkshire’s second-biggest plc.

Asked what he was most proud of, Mr Humphrey replied: “The highlight for me is creating a team that can take over and will continue to grow.”

His replacement, Steve Foots, is himself an internal recruit with 20 years’ service with the chemicals group.

Mr Humphrey, who held the post of chief executive for 13 years, led Croda on a string of transformative acquisitions, including the Sederma deal in 1997 and Uniqema in 2006.

But it is telling that his biggest achievement was creating a company which can continue his work after his departure.

Blackfriar believes this a hallmark of a successful business –one that staff wish to work for, see opportunities for progress within, and have a vested interest in its success.

“Croda has had very few chief executives since it became a public company,” said Mr Humphrey.

He added: “We’ve consistently tried to promote from within because we have good people and a good culture, and it’s necessary that people understand that culture.”

Mr Humphrey’s tenure at Croda is a welcome reminder why companies should invest in home-grown talent.