29/09/2008

B&B Nationalised

The UK Treasury has confirmed the nationalisation of one of the country’s leading mortgage lenders – Bradford and Bingley.

The bank is the second large financial services firm to be taken under the wing of the government in the past year – as the global credit crisis continues to take its grip.

Weekend talks failed to find a totally private sector alternative to sustain the buy-to-let mortgage lender.

The Treasury is now set to take over Bradford and Bingley’s £50 billion mortgage portfolio – bringing it into public ownership.

Spanish banking group Santander, who also owns Abbey, will buy the bank's 200 branches and deposits – worth £20 billion.

Santander's investment is estimated at around £400m.

Chancellor Alistair Darling told the BBC: "To pretend that somehow there was some other solution, unnamed, unspecified - it seems to me to be clutching at straws. You needed to take decisive action. That's what we've done,

Bradford and Bingley specialised in mortgage lending – a banking sector worst hit by the ongoing global financial turmoil.

However, the government has stressed it should be business as usual for the bank’s customers.

Last year the government bought out Northern Rock.

The troubled bank had the same funding model as Bradford and Bingley.

The government’s decision to intervene in the latest banking dilemma was prompted by Bradford and Bingley's inability to meet funding obligations.

(PR)

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