Spanish bank buys savings; BRADFORD & BINGLEY'S ASSETS LIQUIDATED

Evening Chronicle (Newcastle, England), Sept 29, 2008

STRUGGLING mortgage lender Bradford & Bingley is to be nationalised.

But B&B's savings and branch business - which has pounds 20 billion in deposits and 2.7 million customers - will be bought for pounds 612m by Santander, the Spanish bank which owns Abbey and has agreed to buy Alliance & Leicester.

B&B's branches will remain open this morning as usual with call centres and internet banking also available.

Today's break-up will mark a dramatic end to a business which can trace its roots back more than 150 years.

The Financial Services Authority decided on Saturday that B&B was not strong enough to continue as a deposit-taking business after the recent financial turmoil undermined confidence in the bank.

"The Government, on the advice of the FSA and the Bank of England, acted immediately to maintain financial stability and protect depositors, while minimising the exposure to taxpayers," the Treasury said. "For savers and borrowers of Bradford & Bingley it will be business as usual."

The Financial Services Compensation Scheme has paid out pounds 14bn - a loan funded by the Bank of England - to allow B&B's retail deposits to be transferred to Abbey, with a further pounds 4bn to be paid by the Treasury to cover deposits not protected by the scheme.

B&B's shares have been cancelled, with compensation to be paid.

Chancellor Alistair Darling said: "My priority was to protect savers and depositors but also to ensure we got a good deal for the taxpayer."

Mr Darling said the Government had taken "quick, decisive action" to maintain economic stability and promised the taxpayer would be protected.

The plan is to liquidate the bank's assets, with any shortfall made up with a claim against the banking industry.

CAPTION(S):

NATIONALISATION: Alistair Darling