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B&B nationalisation is confirmed | B&B nationalisation is confirmed |
(30 minutes later) | |
Mortgage lender Bradford & Bingley (B&B) is to be nationalised, the government has confirmed. | Mortgage lender Bradford & Bingley (B&B) is to be nationalised, the government has confirmed. |
Under the arrangement, the government will take control of the bank's £50bn in mortgages and loans. Shares in the company have been suspended. | Under the arrangement, the government will take control of the bank's £50bn in mortgages and loans. Shares in the company have been suspended. |
B&B's £20bn savings business and branch network will be bought by rival Abbey, which is in turn owned by Spanish banking group Santander. | B&B's £20bn savings business and branch network will be bought by rival Abbey, which is in turn owned by Spanish banking group Santander. |
B&B is the latest bank to fall victim to the crisis in the financial sector. | B&B is the latest bank to fall victim to the crisis in the financial sector. |
'Lost confidence' | |
"Following recent turbulence in global financial markets, Bradford & Bingley has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution," said the Treasury. | "Following recent turbulence in global financial markets, Bradford & Bingley has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution," said the Treasury. |
It added that the move would protect savers' money and that B&B's branches, call centres and internet operations would "be open for business as usual to provide continuity of service to customers". | It added that the move would protect savers' money and that B&B's branches, call centres and internet operations would "be open for business as usual to provide continuity of service to customers". |
For taxpayers to lose a penny Bradford & Bingley's future losses would have to be unthinkably huge BBC business editor Robert Peston Read Robert Peston's blog | |
BBC business editor Robert Peston said it was a good deal for taxpayers, and that the risk was "quite close to nil". | BBC business editor Robert Peston said it was a good deal for taxpayers, and that the risk was "quite close to nil". |
Chancellor Alistair Darling told the BBC Radio Four's Today programme that the government had moved to nationalise B&B "to provide the stability" that the UK financial sector needs. | |
Mr Darling added that under B&B's nationalisation, taxpayers were protected from any losses due to the Financial Services Compensation Scheme. | |
This means that if B&B's remaining assets prove insufficient, the balance will ultimately be paid by the wider UK banking sector, although Mr Darling said that possible scanario would be a long way down the line. | |
B&B is the second UK bank to be nationalised since the start of the global credit turmoil, following Northern Rock's move into state ownership in February this year. | B&B is the second UK bank to be nationalised since the start of the global credit turmoil, following Northern Rock's move into state ownership in February this year. |
Speculation had intensified in recent weeks that B&B was approaching a funding crisis, leading to a growing number of customers withdrawing their funds. | Speculation had intensified in recent weeks that B&B was approaching a funding crisis, leading to a growing number of customers withdrawing their funds. |