UK Government rescues Bradford & Bingley
The British Government has confirmed that tormented mortgage lender Bradford & Bingley (B&B) is to be nationalised whilst its savings arm will be sold to Spanish bank, Santander.
Chancellor of the Exchequer Alistair Darling said this morning that the Government ‘acted immediately’ to protect the bank’s customers and to ensure the stability of the financial system, whilst making sure that taxpayers are unlikely to have to foot the bill.
B&B is the second UK bank to be nationalised since the credit crunch began, following the nationalisation of Northern Rock earlier this year.
Customers at the bank have been assured that their savings are safe, but shareholders are likely to lose out from the rescue package.
Santander, which owns Abbey, has agreed to buy B&B’s branch network for £612 million, giving them control of 197 new high street branches, 2.7 million new customers and £21 billion in deposits.
B&B customers will be able to use existing channels –branches, internet and telephone – to make transactions, and the B&B brand will stay in place.
The Government, meanwhile, will take responsibility for B&B’s mortgages, meaning that the taxpayer will have to fund any mortgage borrowers at the bank who can’t make repayments.
Zurich Insurance, one of several insurers who have affinity deals with B&B, will hold talks with the bank regarding their future relationship later this week.
Across the Atlantic, the US Government has managed to put together a $700 billion emergency rescue package to stabilise the country’s economy.
Category: Companies News, Financials, Insurance News
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