Nationalised lender Bradford & Bingley (B&B) is hoping to prevent total closure by transforming itself into a mortgage services firm.

Managing director Richard Banks, who had been given the job of closing the business, told the Yorkshire Post that if the organisation became a top mortgage services firm, a third party could buy its £40 billion loan book and B&B could run the mortgages.

B&B has seen staff numbers fall by around 400 in the past year through redundancies and natural wastage, although Mr Banks said he now expects numbers to stabilise, with the new proposals potentially saving hundreds of jobs.

Despite acknowledging any such reorganisation was unlikely before an economic recovery, Banks nonetheless said: "We don't want to wither on the vine. We've got to give people a raison d'etre. If we're the most efficient mortgage services provider and if the assets are sold to a third party we will be running them."

B&B posted a pre-tax loss of £160 million for the six months to the end of June, up from £26.7 million a year earlier.

Although the lender predicted increasing repossessions this year, it said the proportion of its mortgages in arrears had risen more slowly than expected.

Possessions and loans more than three months in arrears rose to 5.88% in the first half of 2009, but edged downward to 5.82% at the end of July amid signs of stabilisation.

B&B traces its history back to 1851 but it was formed in the 1964 merger which amalgamated the Bradford Equitable Building Society and the Bingley Building Society.

The saving arm of the company was sold to Abbey and Alliance & Leicester owner Santander a year ago.

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