One of the most high profile bank bail out schemes from the government recently has been that of the Bradford and Bingley building society. Whilst the savings division of the society was sold off to the Spanish bank Santander, the UK Treasury and British taxpayer were responsible for looking after the bad credit loans which were held on the society’s loan book, many of which were buy to let homeowner loans.

The now nationalised Bradford and Bingley has just released its full accounts for last year and although the company made an overall profit of £134.3 million before tax over the course of 2008, up from £126 million in 2007, it was also revealed that the society wrote off debts from bad loans with a total value of £508 million and it is expected that this figure is likely to get worse as a large proportion of loan arrears have not yet been fully accounted for and will only show up in later tax periods.

The results show that Bradford and Bingley’s total outstanding balance of all its existing loans is currently in arrears of 0.27 per cent for 2008 and on a case by case basis,  4.6 per cent of individual loans are in arrears, or facing repossession proceedings, compared with only 1.64 per cent in the previous year.

In a statement regarding the level of profit, the bank said that this “Reflects two factors which were a direct consequence of the transfer: the sale of he bank’s deposit business to Abbey resulted in a gain of £216.3 million; and the benefit to net interest of the replacement of retail deposits with statuary debt, net of the cost of the guarantees provided by HM Treasury following the transfer, increased income by £115 million.”