Bradford & Bingley bank facing nationalisation: report
Monday, 29 September 2008

AFP, LONDON - British bank Bradford & Bingley will be nationalised soon, according to media reports on Sunday, as the global financial crisis appeared set to claim another corporate scalp.

The BBC website, which did not cite its source, said an announcement was due later Sunday and added that parts of Bradford & Bingley would be sold almost immediately to another bank or banks.
Over the weekend, officials from the Treasury, the Financial Services Authority watchdog and the Bank of England met to try and secure the future of B&B, which has also suffered from a prolonged property market downturn.
Finance minister Alistair Darling will make a full statement on the topic before markets open on Monday morning, Treasury Chief Secretary Yvette Cooper told BBC television.
"Negotiations are still under way at the moment," Cooper said.
"We have been very clear that the priority is to make sure that depositors, that ordinary savers will be properly protected, but also that we can support the stability of the banking system as a whole."
Across the Atlantic, meanwhile, US lawmakers were battling to clinch a 700-billion-dollar (479-billion-euro) deal to rid the financial sector of toxic mortgage-related assets -- and prevent a markets meltdown on Monday.
At the same time, Dutch and Belgian officials scrambled to agree a plan aimed at keeping troubled banking and insurance group Fortis afloat.
Shares in both B&B and Fortis have been hammered by liquidity concerns as the credit crunch, which erupted in August 2007, showed no signs of abating.
Bradford & Bingley stock has slumped in recent weeks amid fears it could become another Northern Rock, which was nationalised earlier this year after a severe funding crisis and a run on its branches.
The collapse of B&B, which specialises in mortgages for investors buying homes in order to rent them out, would mark the latest casualty in Britain's banking sector after HBOS was bought by rival Lloyds TSB earlier this month.
"We can assure customers that their deposits are safe with Bradford & Bingley," said company spokesman Tony McGarahan.
Under the plan, the BBC said the Treasury would sell B&B's 200 branches and its savings business to a rival bank or banks. Possible buyers could include British bank Barclays, Spanish peer Santander and global giant HSBC.
The British government would nationalise B&B's loans, which total 50 billion pounds (63 billion euros, 92 billion dollars) and include home loans of 41 billion pounds, according to the BBC.
"There were several options being discussed. The banks were talking," a source involved in the negotiations said late Saturday.
"What appears to have happened is that there is no way that they were going to get a private sale by the time the markets opened on Monday morning, but there was enough interest to keep talking."
Bradford & Bingley had announced Thursday that it was cutting 370 jobs, mainly at its mortgage processing centre near London, in a bid to save 15 million pounds.
The bank last month revealed net losses of 17.2 million pounds for the first half of 2008, attributing them to "turbulence in the banking and housing sectors."

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