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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.”


Where do signs point?

In my last article, I started to look at how financial advisers can use information and statistics from the financial pages of the quality press to help in portfolio planning for clients.This week, I turn my attention to the information on interest rates published in the inside pages of the Financial Times. Financial advisers can […]

N3 will never happen says FSA

N3, the date set for August 2001 when the FSA was due to regulate mortgage lending and administration, will no longer happen according to the FSA.Following the Treasury&#39s announcement yesterday that mortgage advice and general insurance broking are to be regulated by the FSA from 2004 N3 has been cancelled.The FSA is now consulting on […]

Discounters set to feel bite from falling business

Plummeting trail commission and a dive in new business volumes are set to throw many of the newest discount brokers into financial crisis this winter.Poor market conditions over most of the last two years have started to eat heavily into trail revenues, while a fall in advertising by fund managers combined with low investor confidence […]

Misys announces cost of DBS integration

The cost of integrating m-link and AssureWeb pushed the losses on Misys&#39s portals to £5m for the six months ending November 30.In a trading statement Misys said its financial services division had performed “well”, and said the cost of assimilation of DBS was £2m. Offloading Screentrade, Misys&#39s business-to-consumer arm, cost £3m.


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