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Treasury to nationalise B&B bank Treasury to nationalise B&B bank
(10 minutes later)
Troubled bank Bradford & Bingley is to be nationalised, the BBC has learned.Troubled bank Bradford & Bingley is to be nationalised, the BBC has learned.
Officials from the Treasury and the Financial Services Authority (FSA) have been in talks with executives from the bank in a bid to secure its future.Officials from the Treasury and the Financial Services Authority (FSA) have been in talks with executives from the bank in a bid to secure its future.
BBC business editor Robert Peston says the Treasury will then speedily sell B&B's 200 branches and its savings business to a bank or number of banks.BBC business editor Robert Peston says the Treasury will then speedily sell B&B's 200 branches and its savings business to a bank or number of banks.
B&B, which has seen its share price crash recently, assured savers that their deposits were safe.B&B, which has seen its share price crash recently, assured savers that their deposits were safe.
'Difficult choices''Difficult choices'
Bradford & Bingley spokesman Tony McGarahan said discussions were taking place and an announcement would be made before the stock market opened on Monday.Bradford & Bingley spokesman Tony McGarahan said discussions were taking place and an announcement would be made before the stock market opened on Monday.
"We can assure customers that their deposits are safe with Bradford & Bingley," he said."We can assure customers that their deposits are safe with Bradford & Bingley," he said.
The British Bankers Association is unhappy at some aspects of the plan.The British Bankers Association is unhappy at some aspects of the plan.
Association chief executive Angela Knight told BBC Five Live she was not happy the taxpayer was having to take on the liability of B&B as well as Northern Rock.Association chief executive Angela Knight told BBC Five Live she was not happy the taxpayer was having to take on the liability of B&B as well as Northern Rock.
She said: "I don't know anybody who is comfortable with that. There's a series of difficult choices here.She said: "I don't know anybody who is comfortable with that. There's a series of difficult choices here.
"The financial services industry underpins, not just the UK economy, but indeed all of us individually, and there can be times where authorities have to step in.""The financial services industry underpins, not just the UK economy, but indeed all of us individually, and there can be times where authorities have to step in."
She added that it was a "very great shame that it's got to this place".She added that it was a "very great shame that it's got to this place".
But our business editor said that B&B was getting "perilously close to a funding crisis... there had to be a solution".But our business editor said that B&B was getting "perilously close to a funding crisis... there had to be a solution".
The Conservative leader, David Cameron, said nationalisation should be a last resort.The Conservative leader, David Cameron, said nationalisation should be a last resort.
He told the BBC the Tories would not sign "blank cheques" for the taxpayer to bail out failing institutions.He told the BBC the Tories would not sign "blank cheques" for the taxpayer to bail out failing institutions.
He also said that what was most important in a case such as B&B was that depositors' savings were protected.He also said that what was most important in a case such as B&B was that depositors' savings were protected.
But John McFall, chairman of the Commons Treasury Select Committee, told the BBC: "We have to make a decision - to we take it [B&B] into the state, or do we play Russian roulette with people's jobs and homes?But John McFall, chairman of the Commons Treasury Select Committee, told the BBC: "We have to make a decision - to we take it [B&B] into the state, or do we play Russian roulette with people's jobs and homes?
"I know what I'd prefer.""I know what I'd prefer."
Loans nationalisedLoans nationalised
B&B's share price has plummeted and it has announced plans to cut 370 jobs due to a downturn in the mortgage market.B&B's share price has plummeted and it has announced plans to cut 370 jobs due to a downturn in the mortgage market.
A year ago its share price was 300 pence, but has now sunk to 20 pence.A year ago its share price was 300 pence, but has now sunk to 20 pence.
HAVE YOUR SAY Why don't they have the sense to nationalise the things that matter - Water, Electricity, Gas, Railways etc, etc Colin, Plymouth, UK Send us your commentsHAVE YOUR SAY Why don't they have the sense to nationalise the things that matter - Water, Electricity, Gas, Railways etc, etc Colin, Plymouth, UK Send us your comments
The bank will be nationalised using special legislation the Treasury put through when it took Northern Rock into public ownership earlier this year.The bank will be nationalised using special legislation the Treasury put through when it took Northern Rock into public ownership earlier this year.
The measure is expected be announced on Sunday night or Monday morning.The measure is expected be announced on Sunday night or Monday morning.
The Treasury and FSA will negotiate with banks interested in buying parts of B&B. Possible buyers included Santander of Spain, HSBC and Barclays.The Treasury and FSA will negotiate with banks interested in buying parts of B&B. Possible buyers included Santander of Spain, HSBC and Barclays.
Santander, which already owns Abbey and Alliance & Leicester, has been looking at B&B for some time.Santander, which already owns Abbey and Alliance & Leicester, has been looking at B&B for some time.
The nationalisation and break up of Bradford & Bingley will represent a momentous event in the history of British banking Robert Peston href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/09/bb_to_be_nationalised.html">Robert Peston's blog The nationalisation and break up of Bradford & Bingley will represent a momentous event in the history of British banking Robert Peston href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/09/bb_end_of_an_era.html">Robert Peston's blog
B&B's £50bn of loans, including £41bn of home mortgages, will not be sold and will be nationalised on a long-term basis. The mortgages may be given to the nationalised Northern Rock to manage.B&B's £50bn of loans, including £41bn of home mortgages, will not be sold and will be nationalised on a long-term basis. The mortgages may be given to the nationalised Northern Rock to manage.
"The Bradford and Bingley mortgage book is a lower quality book of mortgages, it is a worse asset than Northern Rock," said Charlie Parker, of Citywire."The Bradford and Bingley mortgage book is a lower quality book of mortgages, it is a worse asset than Northern Rock," said Charlie Parker, of Citywire.
"It has experienced double the arrears rates of other lenders.""It has experienced double the arrears rates of other lenders."
The bank experienced significant withdrawals of cash from its branches and online bank on Saturday amid customer concerns about its situation.The bank experienced significant withdrawals of cash from its branches and online bank on Saturday amid customer concerns about its situation.
'Less vulnerable''Less vulnerable'
The Treasury's decision to sell B&B's savings business means depositors and savers' money should be safe.The Treasury's decision to sell B&B's savings business means depositors and savers' money should be safe.
"In terms of UK banking problems, the nationalisation of Bradford and Bingley should be the last of the banking accidents here," our business correspondent said."In terms of UK banking problems, the nationalisation of Bradford and Bingley should be the last of the banking accidents here," our business correspondent said.
He said there was a class of bank that had relied heavily on the mortgage market - Northern Rock, HBOS, and B&B - and which had now either been nationalised or taken over.He said there was a class of bank that had relied heavily on the mortgage market - Northern Rock, HBOS, and B&B - and which had now either been nationalised or taken over.
"The remaining banks have much broader bases, they are less vulnerable," he added."The remaining banks have much broader bases, they are less vulnerable," he added.
However, B&B's shareholders and holders of its subordinated debt may lose out.However, B&B's shareholders and holders of its subordinated debt may lose out.
Our business editor says the nationalisation and break-up of B&B represents a momentous event in the history of British banking.Our business editor says the nationalisation and break-up of B&B represents a momentous event in the history of British banking.
We can assure customers that their deposits are safe with Bradford & Bingley Tony McGarahanBradford & Bingley spokesmanWe can assure customers that their deposits are safe with Bradford & Bingley Tony McGarahanBradford & Bingley spokesman
He said: "It will mean that every building society that floated on the stock market in the wave of demutualisations of the past two decades will either have collapsed or been sold to a conventional bank."He said: "It will mean that every building society that floated on the stock market in the wave of demutualisations of the past two decades will either have collapsed or been sold to a conventional bank."
B&B was close to seeing a demand from depositors for the return of billions of pounds, which it would have been unable to find.B&B was close to seeing a demand from depositors for the return of billions of pounds, which it would have been unable to find.
Credit rating agencies had been downgrading the rating of its covered bonds, a form of funding which involves packaging up mortgages for sale to investors.Credit rating agencies had been downgrading the rating of its covered bonds, a form of funding which involves packaging up mortgages for sale to investors.
Liberal Democrat treasury spokesman Vince Cable said: "There doesn't seem to have been a white knight in the offing. The alternative otherwise was just to let the thing go bust and protect the depositors".Liberal Democrat treasury spokesman Vince Cable said: "There doesn't seem to have been a white knight in the offing. The alternative otherwise was just to let the thing go bust and protect the depositors".