Bradford & Bingley PLC

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Bradford & Bingley PLC

21-27 Lambs Conduit Street
London WC1N 3BD
United Kingdom
Telephone: 44 20 7067 5500
Fax: 44 20 7067 5654
Web site:

Public Company
Incorporated: 1964 as Bradford & Bingley Building Society
Employees: 6,682
Total Assets: £32.2 billion ($56.64 billion) (2003)
Stock Exchanges: London
Ticker Symbol: BBG
NAIC: 522292 Real Estate Credit; 522120 Savings Institutions

Once Britain's second largest building society, Bradford & Bingley PLC has transformed itself into the country's tenth largest bank, with total assets of £32.2 billion ($54 billion) in 2003. Bradford & Bingley has done more than convert its status from mutual building society to a publicly listed bank; it has also shifted away from its traditional mortgage lending base. While Bradford & Bingley continues to operate its national network of Mortgage Express mortgage lending businesses, it has also built England's largest network of Independent Financial Advisors (IFAs), under primary brands The Marketplace and Charcol. Much of the company's growth in these areas has come through acquisitions, including the 2000 purchase of John Charcol and continuing through the end of 2003 with the acquisitions of IFA networks Holden Meehan and Aitchinson & Colegrave. The bank also operates the United Kingdom's fourth largest estate agency network, with more than 300 branches operating under various brand names, including Slater Hogg & Howison and Gascoigne Pees. Yet Bradford & Bingley's transformation appears not to have generated significant profit growth. In May 2004, the bank announced its intention to perform an about-face, abandoning the IFA model for the "multitie" financial products model made possible under the "depolarisation" reform in Britain's banking system in the early 2000s. As part of that process, Bradford & Bingley intends to sell off its newly noncore IFA networks, including the Charcol, Holden Meehan, and Aitchinson & Colgrave businesses. Leading the company's newest transformation is Steven Crawshaw, who was appointed CEO in March 2004. Bradford & Bingley PLC is listed on the London Stock Exchange.

Joining the Building Society Movement in the 1850s

The industrialization of Britain brought a demand for housing among the country's rising urban populations. The first mutual aid societies appeared in the late 18th century and, typically, featured the grouping of a number of artisans who pooled resources to build housing for themselves. Newly built houses were attributed to members of the pool by means of a ballot; when all the members had been provided housing, the pool was disbanded. For this reason, the early groups were known as "terminating societies."

As industrialization progressed in England, the population of the urban working class grew steadily. Toward the mid-19th century, the mutual aid society adapted to meet the needs of this new population. The lower wealth of individual members was compensated by their far larger number, who paid into the common pool. Instead of directly providing funding for housing, the building societies provided loans to members, who then paid back into the society. The new building societies were not meant to be disbanded, but instead were considered permanent, and indeed, many of the new type of building society incorporated the word "Permanent" into their names.

Over time, the building societies began to offer a wider range of banking services to their customers, adding savings products to their lending business. The building society movement was further solidified by the passage of a Building Societies Act in 1874, which also restricted building society operations to a limited number of financial products, such as mortgages and savings. The rise of worker's movements and the unionization of the British workforce also contributed to the rise of the building society sector, and by the late 19th century the movement had spread throughout the country. At its peak, the United Kingdom boasted some 2,700 building societies.

The earliest building societies tended to be rather small, serving only their own local communities and outlying areas. In Yorkshire, near Leeds, two building societies were formed in the neighboring towns of Bradford and Bingley in 1851. The first was the Bradford Second Equitable Benefit Building Society, founded in August of that year. The second was founded in Bingley, and grouped two neighboring villages as Bingley, Morton and Shipley Permanent Benefit Building Society.

Following the passage of the Building Societies Act of 1874, the Bradford group reincorporated as the Bradford Second Equitable Building Society in 1882. The society grew strongly with the strong growth of Bradford's population base, and by the outbreak of World War I had topped assets of £1 million. In the meantime, more stringent legislation, put in place in the 1890s, had contributed to a sharp decline in the number of building societies in operation, and by World War I there were only 1,700 building societies. Despite their impact on British society, the building society movement remained financially modestby 1914, the total assets of the country's building societies amounted to just £76 million. The Bradford society's strong asset base placed it among the country's top building societies.

Merger of Equals in the 1960s

Bradford continued to build its stature into the 1930s. In 1921, the society expanded by acquiring the Leeds Equitable Building Society. Then, in 1930, Bradford opened its first branch office, on London's High Holborn Street. Bradford was not alone in this geographic diversification. By 1934, the Bingley society, which had changed its name to Bingley Building Society in 1929, had opened its own London branch. Bradford later simplified its name, too, becoming the Bradford Equitable Building Society in 1946. Both societies continued building up their branch networks. By the early 1960s, Bradford's network included 22 branches stretching from Glasgow to London. Bingley, which boasted more than 30 branches, had concentrated its own growth on its northern region base. At the same time, the two societieslocated within five miles of each otherbegan cooperating in an effort to stem the growing competition from such nearby and large-scale competitors as Leeds Permanent, the Provincial, Halifax, and local rival, the Bradford Permanent.

By then, both societies had been hit by legislation that forced building societies to raise their mortgage rates, starting in 1939. This change, and rising competition from the nation's banking sector for members' savings accounts, forced the beginning of a shakeup in the U.K. building society market, which entered a long period of consolidation. The consolidation of the sector took on greater movement in the 1960s, after the passage of a new Building Societies Act in 1960, which placed limits on the size of loans, particularly corporate loans, made by building societies. The British government encouraged the further consolidation of the sector with the passage of an additional Building Society Act in 1962, which incorporated all previous legislation governing the sector. The result was a stream of mergers and acquisitions that continued into the 1990s. By then, just 100 or so building societies remained.

The Bradford and Bingley societies proved to be survivors of the industry consolidation in large part by joining together. Bingley had started off on its own, acquiring the Kendal Model Building Society in 1963. In that year, however, Bradford and Bingley began their own merger negotiations, and soon after announced their intention to merge their operations, forming the single Bradford & Bingley Building Society. The merger of equals, completed in 1964, one of the largest to date, created the nation's eighth largest building society with total assets of more than £100 million, and a national branch network of more than 50 branchesthe level of cooperation between the two societies had helped them avoid too much overlap, and the larger group possessed duplicate branches in just a small number of larger markets.

Bradford & Bingley promptly adopted a well-known logo, featuring two menknown as Mr. Bradford and Mr. Bingleysporting bowler hats. At first operated by a joint team of managers from Bradford and Bingley, in 1966, the former Bingley head, Robert Gardner, was appointed as the sole general manager of the entire group.

Gaining Scale in the 1980s

In 1969, Bradford & Bingley began innovating, launching a new and successful savings product, known as the Save As You Earn scheme. The society also became an early adopter of computer technology, installing its first IBM computer in 1968. The company continued marketing aggressively into the 1970s, and expanded by opening a number of new branches, including 13 new branches in 1973 alone. By the end of the decade, the societies' assets had topped £1 billion for the first time.

As the consolidation of the building society sector gathered steam in the 1980s, Bradford & Bingley emerged as one of the trend's primary drivers. In 1980, Bradford & Bingley added Spread Eagle Building Society, followed by Hyde Building Society in 1981. In 1982, the society acquired Heart of Oak and Enfield Building Society, adding its 28 branches. That acquisition particularly strengthened Bradford & Bingley's presence in the southeast of England. In that year, also, the society picked up new additions in Saddleworth and Swansea Park, as well as the Target Building Society.

Company Perspectives:

Our Strategy: Our focus continues to be on growing our selective lending and retail businesses, whilst maintaining cost control. We aim to build and develop our retail business by investing in: A growing adviser base; improving the network; building new IT sales and support infrastructure. Increase margin in the selective lending business whilst offering market leading products via the Mortgage Express brand. Improve level of cross-sell from estate agency and savings customers.

Into the mid-1980s, Bradford & Bingley continued its stream of acquisitions and takeovers, adding Horsham, Housing and General, Stockport, and Padiham in 1983; United Provinces, Clapham Permanent, Dover & Folkestone, and Glamorgan in 1984; and Forresters, Hibernian, and Merseyside in 1985.

The society next entered merger talks with another of the country's leading building societies, Yorkshire Building Society, in 1986. When those talks collapsed, Bradford & Bingley instead returned to the acquisition trail, acquiring Stanley Building Society in 1986 and Chilterns Building Society in 1987. After a brief pause, the society returned to expansion, adding building societies in Sheffield, Louth Mablethorpe & Sutton, and Leamington in 1990 and Hampshire and Hendon in 1991. By then, Bradford & Bingley's total assets had soared past £22 billion.

Multi-tie Transformation for the New Century

The building society consolidation had been completed in large part by the mid-1990s, and by the turn of the century, just 60 building societies remained, most of which were relatively modest in size. The fading out of the building society movement was spurred in large part by new legislation passed in the 1980s. On the one hand, banks and other financial institutions were allowed to extend their reach into mortgages, the building societies' traditional territory. On the other hand, the building societies, in a new act passed in 1986, were allowed to extend their own operations into other financial areas. At the same time, the building societies were given the right to opt to abandon their mutual status in favor of a public offering or acquisition by a bank. Many of the country's largest building societies, such as Abbey National, took advantage of the new rules, and promptly secured their places among the country's largest financial institutions.

Bradford & Bingley remained a notable exception, sticking to its mutual status into the late 1990s and, with assets of £24 million by the end of the decade, claiming the number two spot among the country's building societies. Yet the society took advantage of the new freedom of operations and began adding new operations in the middle of the decade. One of the society's first moves was to purchase the Mortgage Express chain from Lloyds TSB in 1997. Mortgage Express was present in the specialized mortgage segment, with a focus on the self-employed market. In 1998, Bradford & Bingley branched out from mortgages for the first time, returning to Lloyds TSB in order to acquire its Black Horse Estate Agents operation, one of the country's leading estate agents with a national network of 370 offices.

This move was part of Bradford & Bingley's shifting focus from lending to retail operations. In 1999, the company solidified that transition with the purchase of John Charcol, the country's leading Independent Financial Advisor (IFA), with some 700 branches throughout the United Kingdom.

Yet Bradford & Bingley's mutual status was challenged in that year by a member revoltunder building society rules, members were allowed to petition to convert a society's status to public limited company. Management at first opposed conversion. Yet, after an early poll of membership indicated that a majority favored conversion, the management gave in, and instead backed the conversion. When the matter came to a vote in 2000, fully 80 percent of the society's membership favored conversion. Bradford & Bingley then completed its public offering in December 2000, taking on the new name as Bradford & Bingley PLC.

Bradford & Bingley now emphasized its growing retail arm, which accounted for the major part of its revenues and especially its profits. As part of its refocus, the company formed a joint venture with Alltel Corporation, based in the United States, in order to outsource its lending support operations. In 2001, the company launched a new chain of independent mortgage broking agents, called The MarketPlace at Bradford & Bingley, which provided IFA services within the former society's national network of more than 600 branches.

Under the legislation governing conversions, Bradford & Bingley was protected from hostile takeover attempts for a five-year period. Yet the company was rumored to have entered talks with the larger Barclays PLC. Those talks reportedly broke off after the two sides were unable to agree about a purchase price. Instead, Bradford & Bingley renewed its interest in the mortgage market in 2002. In that year, it ended the Alltel joint venture. At the same time, its mortgage business gained new scale with the announcement of its acquisition of General Motors Acceptance Corporation's U.K. mortgage business for £650 million.

Key Dates:

The Bradford Second Equitable Benefit Building Society and the Bingley, Morton and Shipley Permanent Benefit Building Society are created.
Bradford acquires the Leeds Equitable Building Society.
Bradford opens its first branch office in London.
Bingley opens a branch office in London.
Bingley acquires the Kendal Model Building Society.
Bradford and Bingley complete a merger, forming the eighth largest building society in the United Kingdom.
Bradford & Bingley opens 13 new branches.
Total assets top £1 billion.
Bradford & Bingley launches an acquisition drive, taking over Spread Eagle Building Society, the first of more than 20 over the next decade.
Total assets top £22 billion.
The company begins expanding into the retail segment with the acquisition of Mortgage Express from Lloyds TSB.
Black Rock Estate Agents is acquired from Lloyds TSB.
The company acquires the John Charcol network of IFAs; "de-mutualizes" and lists on the London Stock Exchange as Bradford & Bingley PLC.
The MarketPlace IFA network is launched within the existing branch network.
The company pays £650 million to acquire the General Motors Acceptance Corporation's U.K. mortgage business.
The company acquires the Holden Meehan and Aitchinson & Colgrave IFA networks.
The company announces plans to sell off its IFA operations and refocus as a multi-tie operator.

Through 2003, Bradford & Bingley continued building up its IFA network. In June of that year, the company acquired Holden Meehan, a leading IFA group, which was then placed under the Charcol brand name. The acquisition helped place Bradford & Bingley in the top ranks of U.K. IFA groups. Another result of the acquisition was that it caused Bradford & Bingley to lose its takeover protection.

Bradford & Bingley continued adding on to its IFA network through the end of 2003, acquiring Aitchinson & Colgrave, the Scottish leader with 20 branches. That purchase not only extended the company's geographic reach, it also extended its business into the higher-end bracket.

Yet Bradford & Bingley's IFA growth had not yielded significant improvement in profits, and the group's share price lagged behind its competitors. In March 2004, after CEO Christopher Rodriguez stepped down, the company named Steven Crawshaw in his place. Crawshaw promptly announced that Bradford & Bingley intended to change its strategy, restructuring its operation to focus on a "multi-tie" financial products model made possible by the new de-polarization of the financial products market. As part of that effort, the company announced its intention to sell off its IFA operations in May 2004. After more than 150 years Bradford & Bingley remained a prominent figure on the United Kingdom's financial landscape.

Principal Subsidiaries

Bradford & Bingley International; Charcol; Charcol Holden Meehan; The Marketplace.

Principal Competitors

Abbey National PLC; Barclays Bank; Cheltenham and Gloucester PLC; Alliance and Leicester PLC; Northern Rock PLC; Bank of Ireland; Britannia Building Society.

Further Reading

"B&B IFA Profits Plummet," Money Marketing, February 19, 2004, p. 7.

Bone, Alison, "Crawshaw Says Growth Is Priority at B&B," Money Marketing, March 11, 2004, p. 17.

Brown-Humes, Christopher, "We're Not Banks! Vote for Us!," New Statesman, March 19, 1999, p. XII.

Duncan, Chris, "Crawshaw Takes B&B into Multi-tie Arena," Money Marketing, May 27, 2004, p. 20

Griffiths, Katherine, "Landslide Vote for Conversion at Bradford & Bingley," Independent, July 18, 2000, p. 16.

Henshall, Angela, "IFA 'Jewels' Are Up for Sell-Off," Money Marketing, May 27, 2004, p. 20.

Lloyd, Tammy, "Bradford & Bingley Tops the Tree," Financial Advisor, October 9, 2002.

Love, Bruce, "B&B Goes North with Aitchison & Colegrave Buy," Money Marketing, September 25, 2003, p. 80.

Marshall, Andrew, "How Mr. Bradford and Mr. Bingley Lost Their Hats (But Not Their Heads)," Independent, April 18, 2001, p. 3.

Merrell, Caroline, "Has the B&B Taken Too Much on Board?," Times, February 9, 2004, p. 22.

"Mutually Assured Destruction?," Economist, May 1, 1999, p. 67.

M.L. Cohen

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