Talks to save B&B continuing

Sep 28 2008

Top-level talks over ailing lender Bradford & Bingley are continuing amid reports the bank faces imminent nationalisation.

B&B is in discussions with the so-called Tripartite Authority - the Treasury, Financial Services Authority and the Bank of England - over the potential bail-out as the bank is buffeted by the credit crunch.

The Treasury would only say that discussions were "ongoing", although an announcement could come later or early Monday morning before the Stock Exchange opens.

The BBC, which reported the nationalisation late on Saturday night, said B&B will be sold on almost immediately to another bank or banks.

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

According to the BBC, the Government will nationalise 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 as turmoil in financial markets following the collapse of Lehman Brothers - as well as rescue takeovers of US firm Merrill Lynch and Halifax Bank of Scotland in the UK - raised worries over the future of the firm.

The company uses money markets to help fund its business, but lending rates between banks have soared as banks fearful of losses refuse to lend to each other.

A move to cut 370 jobs and sell off most of the toxic mortgage-backed investments hit by the crunch failed to stop its shares sliding this week.

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