Britain nationalises ailing mortgage lender B&B to avert runSeptember 29th, 2008 - 5:28 pm ICT by IANS
London, Sep 29 (DPA) The British government Monday is to nationalise mortgage lender Bradford & Bingley (B&B), the second bank this year to be taken into public ownership.The move came amid fears that B&B, Britain’s eight-biggest mortgage lender, could be targeted by angry depositors and borrowers in a repetition of the run on Northern Rock a year ago.
The government said that Spanish banking giant Santander is to take over the savings and deposits business of B&B, worth 20 billion pounds ($36.4 billion), a statement said.
This will be done via Abbey National, the leading British bank taken over by Santander earlier this year.
However, B&B’s volatile loans and mortgage business, worth an estimated 50 billion pounds, will be transferred into temporary public ownership.
Under the deal agreed between the government and the Financial Services Authority (FSA) over the weekend, banks will be liable for the financial risk taken on with the nationalisation.
However, the government will extend a loan of 20 billion pounds to banks to bridge the “risk gap” for the banks under a FSA compensation and insurance scheme.
The government says there will no burden to the taxpayer from the nationalisation.
In January, the government placed Northern Rock, Britain’s biggest mortgage lender, into temporary public ownership when a private buyer could not be found.
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