Our correspondent says the nationalisation and break-up of B&B
represents a momentous event in the history of British banking.
He said: "It will mean that every building society that floated on
the stock market in the wave of demutualisations of the past two
decades will either have collapsed or been sold to a conventional bank."
represents a momentous event in the history of British banking.
He said: "It will mean that every building society that floated on
the stock market in the wave of demutualisations of the past two
decades will either have collapsed or been sold to a conventional bank."
Treasury to nationalise B&B bank
Troubled bank Bradford & Bingley is to be nationalised, the BBC has
learned.
Officials from the Treasury and the Financial Services Authority
(FSA) have been in talks with executives from the bank in a bid to
secure its future.
BBC News business editor Robert Peston says the Treasury will almost
instantaneously sell to a bank, or a number of banks.
B&B's share price has plummeted and it has announced plans to cut 370
jobs due to the downturn in the mortgage market.
The bank will be nationalised using special legislation the Treasury
put through when it took Northern Rock into public ownership earlier
this year.
The measure is expected be announced on Sunday night or Monday morning.
The Treasury and FSA will negotiate with banks interested in buying
parts of B&B. Possible buyers included Santander of Spain, HSBC and
Barclays.
Santander, which already owns Abbey and Alliance & Leicester, has
been looking at B&B for some time.
B&B's £50bn of loans, including £41bn of home mortgages, will not be
sold and will be nationalised on a long-term basis. The mortgages may
be given to the nationalised Northern Rock to manage.
The bank experienced significant withdrawals of cash from its
branches and online bank on Saturday amid customer concerns about its
situation.
The Treasury's decision to sell B&B's savings business means that
depositors and savers' money should be safe.
However, B&B's shareholders and holders of its subordinated debt may
lose out.
Our correspondent says the nationalisation and break-up of B&B
represents a momentous event in the history of British banking.
He said: "It will mean that every building society that floated on
the stock market in the wave of demutualisations of the past two
decades will either have collapsed or been sold to a conventional bank."
B&B was perilously close to seeing a demand from investors for the
return of billions of pounds, which it would have been unable to find.
Credit rating agencies had been downgrading the rating of its covered
bonds, a form of funding which involves packaging up mortgages for
sale to investors.
Bradford & Bingley spokesman Tony McGarahan said discussions were
taking place and an announcement would be made before the Stock
Market opened on Monday.
"We can assure customers that their deposits are safe with Bradford &
Bingley," he said.
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