FOR THOSE of us who believed in certain immutables, the share slide of the UK’s Bradford and Bingley building society could not have come at a worse time.
As well as its chief executive leaving amid a dire profits forecast, BB was a leader in the buy-to-let spree of the last few years. On Monday its share price fell 25 per cent on the back of massive mortgage defaults.
In spite of earlier assurances that it was not over-exposed to sub-prime lending, this week’s admission bodes ill for the UK and Irish banks who are identified with major loans to investors. Apart from a small number of Irish-based investors, most of BB’s loan book was in the UK, or in Spain and Gibraltar, where its main customer base was among British and Irish to ex-pats and retirees.
As with Northern Rock, Bradford and Bingley has that solid Yorkshire air of “counting its brass” and steering clear of imprudent lending. Now that assumption has proved to be illusionary should we, once again, seek assurances from our main high street banks in Ireland or simply watch as their share prices suffer collateral damage.
