Bradford & Bingley began to cut one in seven employees yesterday as it tried to convince an increasingly sceptical stock market that it had an independent future.

The embattled mortgage bank revealed plans to sack 370 people and announced further bottom-line losses of £134 million after cleaning out its toxic assets portfolio. Shares in the bank, which is grappling with a flood of buy-to-let mortgages turning sour, slumped by 15 per cent to a new closing low of 21p.

Hopes of an immediate white knight bidder receded, with analysts suggesting that no one would be prepared to take on B&B's uncertain £40 billion loan book.

Banco Bilbao Vizcaya Argentaria, Banco Santander of Spain and ING of the Netherlands had been mooted as possible rescuers.

The Financial Services Authority, while extremely concerned, is thought to feel it does not have to step in unless there is an imminent danger of a run by depositors. B&B is strongly capitalised and has access to the Bank of England's Special Liquidity Scheme, which means it could limp on for some time. B&B believes it has sufficient liquidity to last until the end of next year.

Its mortgage processing centre in Borehamwood, Hertfordshire, will close early next year with the loss of 300 jobs, and 50 mortgage advisers in the branches will go, as well as sales staff. B&B said that it needed to make the cost savings because it was receiving far fewer mortgage applications.

Richard Pym, the chief executive parachuted in last month, said that the job losses were regrettable, but added: “We are planning to put the problems of the past behind us and have a business which is fit for purpose going forward.” The problems include downgrades in the past few days of B&B's credit rating, leaving its standing in the money markets just one notch above “junk” status - a near impossible situation for a deposit-taking institution.

On Wednesday it was forced to bow out of acting as counterparty on some transactions in the wholesale markets and had to ask Barclays, a better-rated bank, to take on the risk.

The bank said that the job losses would shave £15 million a year from its costs for an upfront cost of £14 million. It is boosting staffing levels in mortgage arrears collection but gave warning that the head office workforce in Yorkshire will be cut at a later date.

B&B has been hit by rocketing numbers of customers defaulting on their mortgages or falling behind on interest payments. It specialises in lending to buy-to-let landlords and to higher-risk “self-certified” borrowers, those who have not had to provide proof of income to qualify for loans.

The shares are now far below the 55p price at which the bank raised emergency capital in the summer.

Jonathan Pierce, an analyst at Credit Suisse, said: “The form of any potential resolution is unclear. Ultimately, B&B's biggest issue is asset quality and we doubt any major bank will want exposure to a £40 billion mortgage portfolio with arrears almost double the industry, and where over 40 per cent of loans will be in negative equity if house prices fall 30 per cent peak-to-trough, on our estimates.”

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