B&B sells mortgage arm

BRADFORD & Bingley, the former building society, has sold its mortgage broking business, Charcol, to bring its disposal programme to a close.

The mortgage broker, established in 1974, has been sold to a management buy-out team back by private equity house Advantage Capital for an undisclosed fee.

Charcol‘s annual lending for 2003 was over £3bn, which is equivalent to a top three building society.

A new company, Castlegate 342, has been set-up by the management and investors to manage Charcol.

The deal finalises the sale of its non-core assets announced by new chief executive Steven Crawshaw in May.

Other companies sold include B&B‘s estate agency SecureMove and two financial advice businesses.

It means that B&B will take a one-off hit of about £140m, mainly in goodwill and write-offs.

Crawshaw said: 'B&B has continued to make solid progress against the challenges we set out in the spring. Our lending business has continued to grow and we have made significant progress with our retail business.'

He said the disposal programme is now complete. Around 3,900 staff have been moved out of the group with the sold businesses.

In a pre-close statement ahead of its annual results in February, the company said it expects trading profits to be towards the top end of expectations of between £249m and £279m.

However, it claimed the market would soften during 2005 with the housing market continuing to slow.

It echoed rival Nationwide by claiming house prices would rise by just 2% next year, but said the buy-to-let market would be strong as house prices stabilise.

Mortgage lending has slowed compared to first-half figures due to the introduction of new mortgage regulations in November and a general slowdown in the market during the third quarter of the year.

Shares in early morning trading rose by 1% to 278.25p.

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