B&B rescue proposal talks under way

Sep 27 2008

Talks are under way between the Treasury, the Financial Services Authority (FSA) and Bradford & Bingley (B&B) executives to try to work out a rescue package to save the ailing bank.

On Thursday B&B announced plans to cut 370 jobs to save money, and the company's share price has fallen.

Liberal Democrat treasury spokesman Vince Cable called on the government to "avoid months of dithering" and "lance the boil" to deal with B&B.

No decision has yet been made on how to deal with B&B's problems, but it is understood more details are likely to emerge before markets open on Monday morning.

B&B could be nationalised, though this is thought to be a last resort, with a takeover by another bank or banks the preferred option.

Another possibility would be for government to take B&B into public ownership then immediately sell off its best assets. It is not thought possible that the bank could survive without outside assistance.

Speaking after talks with President Bush in the White House, Gordon Brown refused to comment on press reports that B&B could be facing nationalisation.

Amid reports that B&B could be merged with Northern Rock, Mr Cable said the government must learn from the crisis that overwhelmed the Newcastle-based bank last year and act swiftly and decisively.

"Bradford & Bingley's problems are a predictable consequence of the collapsing housing bubble built on a toxic mix of buy-to-let speculation and self certified mortgages," he said.

"The best option would be for Bradford and Bingley to be acquired by another private bank but if the worst comes to the worst and the takeover by Northern Rock goes ahead then the Government must learn from its previous mistakes and avoid the months of dithering that caused serious damage last time."