Only Finance.com - Top mortgage lender quits

Mortgages - Top mortgage lender quits

Stephen Cranshaw, the head of Bradford and Bingley, one of the country's biggest mortgage broker's has announced that he is quitting.

His leave takes place immeadiately “due to a serious cardiovascular condition” and he will be replaced in the short term by chairman at Bradford and Bingley, Rod Kent.

Mr Cranshaw's shock departure comes the day before a major trading update, which, according to reports, will see the firm announce a serious profit warning.

The credit crunch has affected that bank greatly and as a result, Bradford and Bingley are in the process of attempting raise £300 million in order to balance it's profit sheets.

Having denied any problems in April, in the following month the firm admitted that it was launching a rights issue in order to try and offset some of it's weakening profit margins.

According to the Sunday Times, when the profit warning comes the banks profits are “expected to fall well below analysts forecasts” which were between £160 million and £200 million before tax.

This week the profit warning “is expected to be contained within the bank's rights issue document” which is on it's way.

The bank's troubles really began with it's American mortgage market when many mortgage holders in the United States began defaulting on their mortgage repayments.

Huge numbers of borrowers at a time were defaulting as interest rates grew too high, translating into a sudden and devastating loss for most of the major lenders.

As a result, Bradford and Bingley's profits last year were almost half than their profits in the year previously, falling by a massive £120 million.

Their problems were exacerbated as the UK buy to let market began to falter. For Bradford and Bingley this was a massive blow as they hold the biggest share of the UK buy to let market, controlling 20 per cent of UK buy to let mortgages.

In an attempt to claw back profit the bank grouped together a lot of unpaid loans, repackaged them and sold them with higher interest rates on the world market.

Still struggling to balance the books, Bradford and Bingley has been requesting bigger deposits of its customers and charging higher interest rates.

Even the £50 billion cash injection from the Bank of England could not do much to save the floundering mortgage market.

As the credit crunch continues and receives more and more press the problems are in some ways exacerbated as people are more cautious to borrow in such an unstable environment.

It is in this climate which Stephen Cranshaw has announced his resignation due to a heart condition. One wonders whether perhaps his heart condition was also exacerbated by the credit crunch?