B B Mortgage Finance - Financial Steps

B&B Mortgage Finance, historically known as Birmingham & Bridgwater Building Society, played a significant role in the UK’s mortgage landscape for many years. Understanding its place in history requires acknowledging its evolution and eventual transition into other financial entities.

Originally a mutual building society, B&B was founded in 1849. Mutual status meant it was owned by its members (savers and borrowers), with profits reinvested for their benefit. For decades, B&B operated successfully under this model, offering traditional mortgage products and savings accounts. It expanded its reach nationally, becoming a familiar name on high streets across the UK.

The shift towards a more competitive and complex financial environment in the late 20th and early 21st centuries significantly impacted B&B. Deregulation in the financial sector led to increased competition from banks and other lenders, creating pressure on margins and prompting many building societies to consider alternative business models.

In 2000, B&B took the decision to demutualize and become a public limited company (plc), renaming itself Bradford & Bingley. This move was driven by the perceived need to raise capital for expansion and to compete more effectively with larger financial institutions. Shareholders replaced members as the owners, and the focus shifted towards maximizing shareholder value.

Following demutualization, Bradford & Bingley pursued a strategy of rapid expansion, particularly in the buy-to-let mortgage market. This strategy, while initially successful, ultimately proved to be a major contributing factor to its downfall during the 2008 financial crisis. The company became heavily exposed to subprime mortgages and faced significant liquidity problems as the housing market declined and credit markets froze.

In September 2008, Bradford & Bingley was nationalized by the UK government to prevent a collapse that could have had severe consequences for the wider financial system. The savings business and branch network were sold to Abbey National (later Santander UK), while the mortgage book and other assets remained under government control, managed by UK Asset Resolution (UKAR).

The remnants of Bradford & Bingley’s mortgage book have since been gradually wound down and sold off to other lenders. The story of B&B Mortgage Finance serves as a cautionary tale, illustrating the risks associated with rapid expansion, exposure to risky assets, and the potential vulnerabilities of even well-established financial institutions in times of economic crisis. It underscores the importance of responsible lending and the need for robust regulation in the mortgage market.