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B&B nationalisation is confirmed B&B nationalisation is confirmed
(20 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.
The government will take control of the bank's £50bn mortgages and loans, while B&B's £20bn savings unit and branches will be bought by Spain's Santander.The government will take control of the bank's £50bn mortgages and loans, while B&B's £20bn savings unit and branches will be bought by Spain's Santander.
Chancellor Alistair Darling said investors had lost confidence in B&B and the government was moving to stabilise the wider financial sector.Chancellor Alistair Darling said investors had lost confidence in B&B and the government was moving to stabilise the wider financial sector.
He also said that taxpayers were being protected from any B&B losses.He also said that taxpayers were being protected from any B&B losses.
'Lost confidence''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.
Alistair Darling: Measures are in place to protect the taxpayerAlistair Darling: Measures are in place to protect the taxpayer
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".
Prime Minister Gordon Brown said the move showed the government would "do whatever it takes to ensure the stability of the British financial system".Prime Minister Gordon Brown said the move showed the government would "do whatever it takes to ensure the stability of the British financial system".
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 that the government had moved to nationalise B&B "to provide the stability" that the UK financial sector needs.Chancellor Alistair Darling told the BBC 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 because of the Financial Services Compensation Scheme.Mr Darling added that under B&B's nationalisation, taxpayers were protected from any losses because of the Financial Services Compensation Scheme.
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 blogQ&A: Bradford & Bingley bail-outSend us your comments 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 scenario remained a long way down the line.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 blogQ&A: Bradford & Bingley bail-outSend us your comments 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 scenario remained a long way down the line.
"We are not going to do that immediately, because in the current climate that would be absolutely daft," said the chancellor."We are not going to do that immediately, because in the current climate that would be absolutely daft," said the chancellor.
"But it does mean that in future, as things get better, if there is a shortfall then we will collect it from the industry.""But it does mean that in future, as things get better, if there is a shortfall then we will collect it from the industry."
Shadow Chancellor George Osborne told the BBC that he would study the exact details of the deal, but that protecting taxpayers had to be the main priority.Shadow Chancellor George Osborne told the BBC that he would study the exact details of the deal, but that protecting taxpayers had to be the main priority.
'Good news''Good news'
Abbey, which is part of Spanish banking group Santander, is paying £612m to buy B&B's savings business and 197 branches.Abbey, which is part of Spanish banking group Santander, is paying £612m to buy B&B's savings business and 197 branches.
BRADFORD & BINGLEY Founded in 1964Switched from a building society to a bank in 2000Employs 3,000 peopleBased in West YorkshireTotal of 197 branchesBRADFORD & BINGLEY Founded in 1964Switched from a building society to a bank in 2000Employs 3,000 peopleBased in West YorkshireTotal of 197 branches
Abbey chief executive Antonio Horta-Osorio said the acquisition of B&B's bank's savings account was "good news" for customers.Abbey chief executive Antonio Horta-Osorio said the acquisition of B&B's bank's savings account was "good news" for customers.
"They can be certain that their hard-earned savings are with a bank they can trust.""They can be certain that their hard-earned savings are with a bank they can trust."
To help facilitate Abbey's takeover of B&B's savings business and branches, it has been paid £14.6bn from the Financial Services Compensation Scheme - funded by the Bank of England - and a further £4.5bn from the Treasury.To help facilitate Abbey's takeover of B&B's savings business and branches, it has been paid £14.6bn from the Financial Services Compensation Scheme - funded by the Bank of England - and a further £4.5bn from the Treasury.
Gordon Brown has pledged to do "whatever it takes"
This £19.1bn is to guarantee that Abbey could pay back all B&B savings account customers, if need be.This £19.1bn is to guarantee that Abbey could pay back all B&B savings account customers, if need be.
The government says it will get the money back - starting with the Treasury's £4.5bn - following the redemption and sale of B&B's mortgages, that are now in public hands.The government says it will get the money back - starting with the Treasury's £4.5bn - following the redemption and sale of B&B's mortgages, that are now in public hands.
A spokeswoman for Abbey said while it was "business as usual" for B&B's branches, it was too early to say whether any would close in the long term.A spokeswoman for Abbey said while it was "business as usual" for B&B's branches, it was too early to say whether any would close in the long term.
However, with Santander already owning both Abbey and Alliance & Leicester, it appears likely that there will be some branch closures.However, with Santander already owning both Abbey and Alliance & Leicester, it appears likely that there will be some branch closures.
B&B currently has about 3,000 staff.B&B currently has about 3,000 staff.
Funding problemsFunding problems
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.
B&B got itself into financial difficulty as a result of the credit crunch removing the option of raising funds through the global wholesale money markets.B&B got itself into financial difficulty as a result of the credit crunch removing the option of raising funds through the global wholesale money markets.
Its problems were then further intensified by its focus on the buy-to-let market, which has seen a large rise in bad debts as UK house prices have fallen.Its problems were then further intensified by its focus on the buy-to-let market, which has seen a large rise in bad debts as UK house prices have fallen.
B&B has also struggled to fund a number of takeovers.B&B has also struggled to fund a number of takeovers.


Do you have a buy-to-let mortgage with Bradford & Bingley? Are you a B&B investor or shareholder? Do you have a question for our financial expert to answer? Get in touch with your questions and comments using the form below:Do you have a buy-to-let mortgage with Bradford & Bingley? Are you a B&B investor or shareholder? Do you have a question for our financial expert to answer? Get in touch with your questions and comments using the form below:
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