Under-pressure mortgage lender Bradford & Bingley yesterday announced the axing of its last branch-based mortgage advisers as it cut 370 jobs in a final effort to survive the credit crunch.
Meanwhile, the takeover of Edinburgh-based HBOS remains under scrutiny after Deutsche Bank analysts recommended investors sell the shares of acquirer Lloyds TSB and the Office of Fair Trading revealed it will investigate the merger despite the government's decision to override competition rules.
Bradford & Bingley's move, which was accompanied by the announcement that it has disposed of a large chunk of high-risk assets, was welcomed by analysts but worries about its ability to access funds on the money market sent its shares to a record low close of 21.25p, down 3.75p or 15% on the day. They have fallen 90% in the past year.
Among those hedge fund managers continuing to hold short positions in the bank's stocks, having sold shares they do not own hoping to purchase them at a lower price later, are Tiger Global Management and Steadfast Capital Management.
Citing the wider economic environment and a fall in mortgage applications, Bradford & Bingley is closing its mortgage-processing centre in Hertfordshire, where 300 staff will go, axing all its remaining branch-based mortgage advisers and significantly reducing the sales team that works with mortgage brokers.
The company reckons it can save £15m a year under the plans, which will cost £14m to implement.
Chief executive Richard Pym said: "We are a strongly capitalised bank now undertaking a complex transition with regrettable job losses, but we are planning to put the problems of the past behind us and have a business which is fit for purpose going forward."
It had already cut the number of mortgage advisers in its branches from 160 to 50 in the first half of the year as mortgage lending fell away. But the company said it has no plans to reduce its branch network and is adding 70 to its arrears operations staff in an effort to recoup cash from people falling behind on their mortgages.
The bank said its intermediary distribution team was being cut to reflect its lower lending ambitions. The bank has struggled to get funding from the markets as its credit rating has been cut by analysts. It said further staff will be cut from its head office.
The company also said that it had slashed its exposure to risky credit assets, selling or writing down all its mortgage-related securities, which have plummeted in value as a result of the US sub-prime mortgage crisis.
The move costs the bank £50.8m but reduces the value of its structured finance portfolio from £746m to £494m.
Bradford & Bingley was not the only bank under scrutiny yesterday. Lloyds TSB was hit by a sell rating from influential Deutsche Bank.
Analyst Jason Napier said that while the bank could reap 50% more than the £1bn of savings it says it expects in taking over HBOS, it would find funding more difficult and would have increased exposure to property lending.
Meanwhile, the deal announced last week, which will give HBOS shareholders 0.833 shares for every one they currently own in the Edinburgh bank, is to come under scrutiny from competition chiefs.
The Office of Fair Trading confirmed it plans to publish a report on the takeover by October 24, although it confirmed the government will make the final decision on the acquisition.
US hedge fund manager Paulson & Co retains short positions in the two banks, betting that they will fall in value, according to disclosures yesterday under new City rules. Despite the pressure, Lloyds closed up 6.25p at 273.25p after a dip in early trading, while HBOS gained 3.5p at 184p.
Despite Tuesday's deadline for declaring short positions in financial stocks, Pan-Agora Asset Management and TT International yesterday revealed for the first time that they are betting against Aberdeen Asset Management, which is also being shorted by AQR Capital Management and Barclays.
BlackRock fund manager Mark Lyttleton revealed that his UK Absolute Alpha fund had closed its short position in Standard Life shares.
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