It is extraordinary how we have become inured to disaster among our big financial institutions. When there were hints last year that Northern Rock was going bust, customers queued round the block to withdraw their money. It made Britain look like a banana republic.

This weekend Bradford & Bingley is on the brink of being broken up but there have been no signs of panic from depositors who have banked some £20 billion with the buy-to-let mortgage specialist.

The extraordinary events of the past 12 months have proved one thing - perception is enough to kill.

B&B’s chief executive, Richard Pym, has done all the right things to scale back its exposure, but the perception outside is widely different and in this market that is all it takes. Perception has already killed three American finance houses and Britain’s HBOS. For B&B its problems stem from the fact that half its £42 billion mortgage book is exposed to buy-to-let.

Today frantic attempts are being made to find buyers for parts of B&B. What parts can’t be sold will be nationalised. If Spain’s Santander emerges the victor – a move that would require the government to overrule competition concerns for the second time – it will have far-reaching implications. It will create a duopoly in Britain, with Santander going head to head with Lloyds TSB/HBOS.

If you want to be a future domestic or global champion you will need a big balance sheet. Lloyds TSB and Santander want to be the champions in Britain, and on the Continent BNP and ING want to play thesame role. Coincidentally, all four banksavoided playing around with highly leveraged instruments in the boom and now they are reaping the rewards. Time to own up WHEN Sir Stuart Rose, chairman of Marks & Spencer, gives his trading update this week he won’t surprise the City. We know profits for this year will fall from £1 billion to below £700m, food sales are suffering and clothing is also down. All the bad news is in the share price. Other companies should take note – dishing out bad news is never pleasant, but when it comes as a surprise it is even more painful.

There are dozens of listed companies that have yet to own up to the fact that their earnings for this year and next and even 2010 will not meet the figures that have been pencilled in by City analysts. In these markets honesty is the best policy. Downgrades are going to come thick and fast.

According to figures from Datastream, the weighted average estimate for earnings growth for 2008 and 2009 for the FTSE All-Share index is 4.8% and 8%. With the downturn, this is testing, particularly for the industrial, financial, media and retail sectors.

There are a lot of chief executives who don’t like receiving bad news, let alone sharing it with investors. That is going to have to change. Sir Humphrey saves it TWO months ago Electricité de France’s (EDF’s) bid for British Energy looked dead in the water.

The French had believed the deal was in the bag, even going as far as booking a room in the Elysée Palace to announce the £12.5 billion takeover of the UK’s only nuclear-power company. The preparations were premature. Two City institutions, big shareholders in British Energy, stopped the deal in its tracks, rejecting the EDF offer.

And that would have been that but for some smart work by a small group of people - John Hutton, the business secretary, Vincent de Rivaz, UK head of EDF, the two companies’ financial advisers and, in particular, a little-known group of civil servants called the Shareholder Executive. This gaggle of former bankers looks after various state assets, usually ones slated for sale. Spurred on by Hutton, who was super-keen to to get new nuclear power stations under construction, members of the executive worked hard to overcome the shareholders’ objections. They amended the offer to convince Invesco, which had the larger of the two refusenik holdings in British Energy, to accept it. Sir Humphrey often gets a bad press, but this time he deserves praise. Hard way to heaven THE archbishops of York and Canterbury have joined the attack on short-sellers, the former describing them as “bank robbers and asset strippers” - only to be embarrassed when it turned out that the Anglican church’s own investment fund was a party to short-selling by lending stock to hedge funds.

Leaving aside the inevitable problems that arise when one strays outside one’s field of expertise - you wouldn’t catch me lecturing the archbishops on theology - it’s fairly clear that the Bible takes a dim view of wealth. Everyone knows Jesus told his disciples that it was easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God (Matthew 19), but there are lots of other examples. “A faithful man will be richly blessed, but one eager to get rich will not go unpunished,” says Proverbs.

So there is a silver lining to the credit crisis. A few tens of thousands of bankers may have lost their Porsches, but they have mightily improved their chances of eternal salvation.

john.waples@sunday-times.co.uk

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