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Public ownership for B&B

Nationalisation of Bradford & Bingley Confirmed

29-September-2008, Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.uk

Bradford & Bingley will become the second bank nationalised by the British government since the financial crisis began, Darling confirmed this morning.

Following a weekend of intense negotiations, it has been announced that the Government will take on Bradford and Bingley’s £41 billion of mortgages, as well as its personal loans, other debts and headquarters.

Spanish banking giant Santander, which also owns Abbey (www.abbey.com) and Alliance & Leicester (www.alliance-leicester.co.uk), will buy up B&B’s branch network and £21 billion deposit book, for £612 million.

The B&B brand will remain, and the bank’s 2.7 million customers will continue to use their existing channels (branches, telephone and internet) for banking.

B&B confirmed its nationalisation in a statement this morning: “We can confirm that all of Bradford & Bingley’s savings business, including its retail branches, has been transferred to Abbey. The rest of the business, including the mortgage operation and headquarters, has been taken into public ownership by the Government.”

Chancellor Alistair Darling said that the Government had taken “quick, decisive action” to ensure economic stability. He said that the move had been necessary to prevent serious damage to the economy and promised that taxpayers’ money would be protected.

He told GMTV: “My priority was to protect savers and depositors but also to ensure we got a good deal for the taxpayer. We had to stabilise the situation in order to protect the banking system as a whole, just as we have done on previous occasions.”

The authorities decided that B&B was no longer a viable bank after the recent collapse in its share price and, faced with uncertainty over its future, the developing run on its funds by savers.

Chris Eagle, commercial manager at CreditChoices.co.uk said: “In the past year we have seen B&B, Northern Rock, Alliance & Leicester and HBOS lose their independence. More banks being swallowed up by rivals means less competition and less choice for savers. It’s now more important than ever to shop around to find the best value savings account and the cheapest mortgage.”

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