FTAdviser.com

Advertising

Bradford & Bingley has reassured mortgage advisers its position in the specialist lending market will remain the same despite issuing a profit warning.

Vicky Luttig, PR manager for Bradford & Bingley, said intermediaries could be "totally reassured" nothing would change at the buy-to-let lender after Steven Crawshaw, chief executive, stepped down and Texas Pacific Group Capital snapped up a 23 per cent stake in the business.

She said: "It is all to do with strengthening our capital position and not to do with funding, but improving our capital ratio means we will be in a better position to grab business in the future."

Bradford & Bingley announced on Monday private equity house Texas Pacific Group Capital would take a 23 per cent stake.

It also confirmed Mr Crawshaw would be stepping down due to a serious illness.

In a trading update issued on Monday, Bradford & Bingley said TPGC had agreed to invest £179m and become a major strategic investor.

The lender has also restructured its rights issue to raise £258m. All shares will be issued at an offer price of 55p per share. This is a reduction from the earlier cash call announced in April, which asked existing shareholders to raise £300m in new capital.

The Council of Mortgage Lenders also confirmed Mr Crawshaw will be stepping down from his position as chairman and Rod Kent, chairman of Bradford & Bingley, will temporarily replace Mr Crawshaw as executive chairman. Nick Cosh, senior independent director, has been appointed deputy chairman with immediate effect.

The trading statement said difficult economic conditions had led to underlying profits at Bradford & Bingley for the first four months of 2008 totalling £56m. This is down from £108m for the same period in 2007.

This was due to the impact of lower interest income and increased credit impairment charges, the statement said.

The number of cases in arrears or possession rose from 6170 at the end of 2007 to 8333 at the end of April.

Mr Kent said: 'The last few weeks have been challenging for Bradford & Bingley and this is a disappointing trading update reflecting a more difficult market environment. I understand shareholders' disappointment.

"Nevertheless, I am delighted to welcome TPGC as a major strategic investor in Bradford & Bingley. With a strengthened capital base and the skills that TPGC will bring I am sure we can develop the business to exploit the opportunities available in our markets in the medium term."

Matthias Calice, a partner for TPGC, said: "Bradford & Bingley has a long-standing established franchise in the UK specialist lending market. We believe the company's superior market position coupled with this injection of capital provides the platform for potential growth and profitability."

Allan Rosengren, group chief executive of Bristol-based IFA Falcon Group, said: "If it helps to shore up the business and improve its capitalisation then it has got to be good news. A permanent replacement to Mr Crawshaw will be found and I suspect they have someone within the organisation capable of filling those shoes."