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B&B&#39s IFA strategy is branded too costly

City analysts have given a cool response to Bradford & Bingley&#39s restructuring programme, predicting that investors will lose patience, hitting the company&#39s value.

The warning follows an end-of-year announcement in which B&B predicts it will increase distribution in 2002, based on a growing salesforce and increased impact of The MarketPlace and Charcol brands.

But analysts argue that the distribution strategy of placing IFAs in high-street branches is too costly and warn it could be years before the distribution arm is contributing significantly to group profits.

They point out that the distribution arm is only contributing 3 per cent to group profits and the group&#39s costs-toincome ratio is double that of similar-sized Northern Rock.

But B&B says its unique position in the marketplace between bank and retailer makes it impossible for analysts to compare it with other companies.

B&B cannot be taken over against its will for five years from its demutualisation in December 2000.

Teather & Greenwood analyst Martin Cross, who last week changed his recommendation on B&B stock from hold to sell, says: “This is a pricey way of running an IFA business. They think they have the luxury of a four-year honeymoon to make this experiment work. We see this stock drifting down.”

B&B group commercial director Ian Darby says: “They are trying to compare apples with pears. It is our challenge to explain that we are a different-looking business. We only launched The MarketPlace in March this year. This is not a nine-month game.”

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