B&B 'set to be nationalised'

Sep 28 2008

The struggling Bradford and Bingley bank is set to be nationalised, it has been reported.

It is understood that an announcement will be made saying that the B&B will be sold on almost immediately to another bank or banks.

There has been no immediate comment from the Treasury - which has been locked in discussions with the B&B and the Financial Services Authority.

However it is clear that the bank is set to become the latest victim of the global credit crunch which has paralysed the world financial system.

According to reports, the Government will nationalise the B&B using the special legislation passed to take Northern Rock into public ownership earlier this year.

B&B's share price has tumbled in recent days, despite announcing plans to cut 370 jobs, due to the collapse of the mortgage market.

Potential buyers for the demutualised building society are said to include the Spanish bank, Santander, HSBC and Barclays.

However, reports say B&B's £50bn loan book will not be sold and will be nationalised on a long-term basis.

Liberal Democrat treasury spokesman Vince Cable warned that the Government could not afford a repeat of the delays over Northern Rock.

"Bradford and 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."