Another One Bites The Dust September 29th, 2008
It was around a year ago when the big headline in both the financial and national press was the collapse of Northern Rock and the subsequent nationalisation of the lender by the Government.
It now appears as though this was just the tip of the iceberg, one year on and things don’t seem to have got any better, as the Government have announced this morning (29th September) that it has just agreed to nationalise Bradford and Bingley and has acquired all the shares in the struggling mortgage lender.
Bradford and Bingley has been in trouble for a number of months and attempted to raise additional funding from its shareholders a few months ago by launching a rights issue, which failed to restore adequate liquidity to the company. Only last week, the company announced that it was making 370 members of staff redundant, by closing its homeowner loan processing centre and getting rid of its mortgage advisers in an attempt to save more money.
The savings part of Bradford and Bingley’s business, which currently holds around £22.2 billion in deposit savings, is to be sold to Santander, the Spanish bank who seem to be snapping up bargains in the financial sector at the moment and already own Abbey and the Alliance and Leicester.
The remainder of the business will be nationalised and public money will now be used to underwrite the lenders £41.3 billion worth of mortgages and personal loans. Today’s news comes less than a week after Lloyds TSB announced that it was taking over Halifax Bank of Scotland to create the largest banking group in the UK.
The Bradford and Bingley board reassured their customers that their savings were in safe hands with Santander and that customers who currently held mortgages and personal loans with them should continue to make their payments as normal.
The Chancellor of the Exchequer, Alistair Darling said “The Government, on the advice of the Financial Services Authority and the Bank of England, acted immediately to maintain financial stability and protect depositors, while minimising the exposure to taxpayers.”
