Overview: anyone for Pym?

& Leicester
was described as the Volvo of the banking world; safe and
unexciting. So who better to be embattled Bradford & Bingley’s new boss than
former A&L FD and CEO Richard Pym?

Pym has cut his retirement short by announcing a return to executive
management, effectively ending the search for a replacement for Steven Crawshaw.

What’s happened…

B&B has been a much publicized casualty of the enduring credit crunch,
with some reports suggesting the market value of the company has fallen by as
much as 85% in the past 12 months.

According to Mike Trippitt, analyst at Oriel Securities, the second half of
last year wasn’t as poor operationally for B&B as many had predicted, and
instead, it was the first half of 2008 which dealt the toughest blow.

‘It was a combination of credit write-downs and arrears picking up and the
need for capital raising and the departing CEO,’ he said.

The £400m rights issue launched in May has been plagued by problems with
retail and institutional investors taking up only about 20% of the available

The remaining B&B stock will be taken up by UBS and Citigroup, as well as
several sub-underwriters.

What’s next…

Now that the capital raising has been finalised and mortgage arrears are
picking up, Pym’s arrival heralds a pivotal time in the history of the lender.
There appears to be two schools of thought dictating B&B’s short-term
profitability: Is it a bad business or is it simply a good business in a bad

Trippitt leans to the latter and believes it’s simply a good business model
experiencing the impacts of taxing market conditions.

‘It’s a good business at a bad time. It’s a specialist lender with a good
market share. There’s a lot of experience,’ he said.

Despite history proving otherwise, Pym’s appointment has fuelled speculation
B&B could be being groomed for a potential takeover.

In his previous role at A&L, he rejected an acquisition offer by Credit
Agricole which, according to Trippitt, was a poor business decision.

‘He sent them packing when the price was right. Hindsight is a grave thing…
he didn’t sell A&L when he should have,’ he said.

Pym’s mandate will be looking to ensure provisioning is adequate and
necessary risk systems are in place.

‘His appointment is good news for B&B,’ Trippitt said.

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