Bradford & Bingley to be nationalised

| September 28, 2008 | 0 Comments

Troubled buy-to-let lender, Bradford & Bingley (B&B) is set to be nationalised, according to the BBC.

Treasury officials and the Financial Services Authority (FSA) have been holding talks with the lender in an attempt to secure its future.

The bank is to be nationalised using special legislation the Treasury implemented after it took Northern Rock into public ownership in February of this year.

It is understood that the Treasury and FSA will negotiate with banks interested in buying parts of the stricken lender.

B&B’s £50 billion loan book, including £41 billion of mortgages, will not be sold and will be nationalised on a long-term basis.

B&B has suffered over recent times, just last week it was downgraded by Fitch Ratings from BBB+ status to BBB-, only one notch above ‘speculative grade‘, or informally known as ‘junk’. Furthermore, Standard & Poor’s downgraded the lender from A-2 to A-3.

It also announced last week its mortgage processing centre in Borehamwood, Hertfordshire, is be closed with the loss of 370 jobs.

Shares in the lender have fallen to record lows following the uncertainty surrounding it. Last year, it was trading at 300p but has plummeted to lows of 20p in the last few days.

However, Tony McGarahan of B&B has assured customers that their savings are secure. He added that talks have been taking place and an announcement is to be made tomorrow morning, prior to the stock market opening.

However, the news has not met with the approval of the British Bankers Association, after chief executive, Angela Knight, said she was unhappy that the taxpayer was having to take on the debt of B&B as well as Northern Rock.

The uncertainty surrounding B&B has meant considerable withdrawals of cash from its branches and online bank have taken place over the weekend.

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