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B&B nationalisation is confirmed B&B nationalisation is confirmed
(30 minutes later)
Mortgage lender Bradford & Bingley (B&B) is to be nationalised, the government has confirmed.Mortgage lender Bradford & Bingley (B&B) is to be nationalised, the government has confirmed.
Under the arrangement, the government will take control of the bank's £50bn in mortgages and loans. Shares in the company have been suspended.Under the arrangement, the government will take control of the bank's £50bn in mortgages and loans. Shares in the company have been suspended.
B&B's £20bn savings business and branch network will be bought by rival Abbey, which is in turn owned by Spanish banking group Santander.B&B's £20bn savings business and branch network will be bought by rival Abbey, which is in turn owned by Spanish banking group Santander.
B&B is the latest bank to fall victim to the crisis in the financial sector.B&B is the latest bank to fall victim to the crisis in the financial sector.
'Lost confidence'
"Following recent turbulence in global financial markets, Bradford & Bingley has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution," said the Treasury."Following recent turbulence in global financial markets, Bradford & Bingley has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution," said the Treasury.
It added that the move would protect savers' money and that B&B's branches, call centres and internet operations would "be open for business as usual to provide continuity of service to customers".It added that the move would protect savers' money and that B&B's branches, call centres and internet operations would "be open for business as usual to provide continuity of service to customers".
For taxpayers to lose a penny Bradford & Bingley's future losses would have to be unthinkably huge BBC business editor Robert Peston Read Robert Peston's blog
BBC business editor Robert Peston said it was a good deal for taxpayers, and that the risk was "quite close to nil".BBC business editor Robert Peston said it was a good deal for taxpayers, and that the risk was "quite close to nil".
Chancellor Alistair Darling told the BBC Radio Four's Today programme that the government had moved to nationalise B&B "to provide the stability" that the UK financial sector needs.
Mr Darling added that under B&B's nationalisation, taxpayers were protected from any losses due to the Financial Services Compensation Scheme.
This means that if B&B's remaining assets prove insufficient, the balance will ultimately be paid by the wider UK banking sector, although Mr Darling said that possible scanario would be a long way down the line.
B&B is the second UK bank to be nationalised since the start of the global credit turmoil, following Northern Rock's move into state ownership in February this year.B&B is the second UK bank to be nationalised since the start of the global credit turmoil, following Northern Rock's move into state ownership in February this year.
Speculation had intensified in recent weeks that B&B was approaching a funding crisis, leading to a growing number of customers withdrawing their funds.Speculation had intensified in recent weeks that B&B was approaching a funding crisis, leading to a growing number of customers withdrawing their funds.