BRADFORD & Bingley (B&B) admitted the full extent of its losses from a foray into mortgage broking yesterday when the bank announced a £140 million exceptional charge relating to its disposals this year.

B&B yesterday said that it had sold Charcol, its mortgage broker, to a management buyout led by the company’s two founders, John Garfield and Charles Wishart, and backed by Jon Moulton, the venture capitalist, and Advantage Capital.

The deal valued Charcol at less than £10 million just four years after B&B bought it for £102.5 million.

The exceptional charge, which also included losses on B&B’s disposal of its estate agency and SecureMove surveying businesses, was much higher than analysts’ expectations. Charcol was expected to fetch between £40 million and £50 million.

Martin Cross, an analyst at Teather & Greenwood, said: “There had been a growing realisation that there would be a significant exceptional item but it has ended up being substantially bigger than the market expected.

“But the shares rose because the company has managed to exit these loss-making businesses and because it said pre-exceptional profits will be at the upper end of expectations, and that is what the market generally focuses on.”

Analysts expect pre-tax profits before exceptional items of between £249 million and £279 million for the year.

The bank’s shares closed yesterday at 285p, up 10p.

Steven Crawshaw, who took over as chief executive in March, said that the bank’s results had been boosted by cost cuts and increased lending. He pledged to return the bank to its main mortgage lending business.

Although Charcol had been in decline for some time, B&B had hoped to raise at least £70 million from the sale of the business, which made pre-tax profits of about £170,000 in 2003.

The mortgage broker was forecast to make only £70,000 this year but sources close to the business say even that figure is too high.

Charcol has suffered in recent years after it expanded too quickly in an increasingly competitive industry.

The investment by Mr Moulton, the founder of Alchemy Partners, will come out of his own pocket.

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