B&B shrugs off merger rumours
The Sunday Times reported a rumour in the city of a possible merger as shares in Northern Rock and Bradford & Bingley hit record highs on Friday 17 February, as talk engulfed the market that the two were to create a £8 billion mortgage specialist. But shares have since fallen after brokers wrote off the speculation.
Industry sources though have not dismissed the idea and continue to point to the possible link-up as a potentially good deal. A source said: “It makes sense that Northern Rock might look towards Bradford & Bingley with an eye on building in the buy-to-let market. They both have building society backgrounds and understand the same types of business. With B&B’s success in the sector it’s type of business would seem to fit Northern Rock’s strategy, especially if it’s looking towards expanding its buy-to-let operation.”
However Nickie Aiken, head of PR at B&B, said: “It was just as big a surprise to us as it was to The Sunday Times. They were saying there was a rumour circulating on Friday afternoon about it but why would they leak their big story if it was true?”
Bradford & Bingley has predicted the housing market will remain strong after a revival in mortgage lending in the second half of the 2005 drove its profits 11 per cent higher.
Steven Crawshaw, chief executive at B&B, commented: “The whole mortgage market came back strongly in the second half of 2005 as confidence returned. Confidence in the buy-to-let business, not just ours but everybody’s is very high at the moment.”
Northern Rock was unavailable for comment at the time of press.