B&B in pre-float bind

By JOANNE HART
Updated:

 

Ever since his appointment as chief executive of Bradford & Bingley building society, Christopher Rodrigues has been considered something of an outsider.

A graduate of management consultants McKinsey, Rodrigues had no direct experience of banking or building societies when he joined B&B, having spent his formative professional life at American Express and Thomas Cook.

Nonetheless, he dedicated himself energetically to B&B's mutuality, employing teams of external consultants to improve the society's efficiency. The work won him few friends within Bradford & Bingley, since it involved sacking hordes of employees considered surplus to requirements. Externally, the drive prompted suspicions that Rodrigues had one eye on a stock market flotation.

This was always strongly denied and appeared to be backed up by the society's decision to underline the benefits of mutuality by reducing the margin between its saving and borrowing rates.

Members failed to appreciate this act of goodwill, however, and last month voted decisively to demutualise.

The decision has left B&B in something of a bind. If it leaves rates where they are, profits will be depressed and so too will the group's eventual stock market value. If rates are broadened out to more "commercial" levels, members might well feel aggrieved. Either way, many are likely to leave as soon as their windfall share certificates drop through the letterbox.

Some senior executives at the building society are said to be privately blaming Rodrigues for the current unpleasant situation. There are even suggestions from those close to B&B that he may soon leave the group.

At least five financial institutions are known to be keen to pounce on the society before flotation, although none wants to be first to bite. The departure of Rodrigues would leave B&B in an even more vulnerable position than it is in already. But perhaps that is some directors' endgame.

Most watched Money videos