MP WANTS INQUIRY INTO BANKS CRISIS; Savings for Santander - loans for taxpayer

Huddersfield Daily Examiner (Huddersfield, England), Sept 29, 2008

Byline: By KATIE CAMPLING News Reporter

HUDDERSFIELD MP Barry Sheerman is demanding an inquiry into the events that have led two major Yorkshire banks into financial trouble.

His call came as the Government confirmed the part-nationalisation of Bradford and Bingley, just days after it bent competition rules to allow the buyout of another troubled Yorkshirebased bank, Halifax, by Lloyds TSB.

Bradford & Bingley shares were today suspended ahead of the expected nationalisation of the struggling mortgage lender.

The Financial Services Authority's move came as markets awaited confirmation of the Government's plans.

The lender's pounds 41.3bn mortgage book is set to be added to the national debt just months after Northern Rock was also taken into public ownership.

But B&B's savings and branch business, including pounds 22.2bn in customer deposits, will be handed to Spanish bank Santander under a purchase deal.

The Spanish bank already owns Abbey and has agreed to buy Alliance & Leicester.

Although the Financial Services Authority had been trying to find a single bidder to take over the bank's pounds 50bn of loans, there have been no takers. Of the pounds 50bn, pounds 42bn is tied up in home mortgages.

It is thought these loans will not be sold, but will be looked after by the Government on a long-term basis.

Mr Sheerman will be in talks with the Chancellor of the Exchequer Alistair Darling and the Treasury this week, pushing to ensure as many jobs and investments as possible are preserved following the changes at the Halifax and Bradford and Bingley.

He said: "It looks like nationalisation is inevitable and thank goodness the Government is acting speedily.

"But people are shocked that this is the second Yorkshire bank to be in trouble.

"I have had people coming to me and saying how can they have been allowed to do this to us?

"Iwill be talking to the Treasury and Chancellor about all this, because we have got to salvage what we can of the jobs and investment that these two major companies mean for Yorkshire."

He said demutualising building societies and allowing them to become banks some years ago had been part of the problem.

"He plans to demand a public investigation into the investments and events that lead the banks into trouble.

"The spivs and get-rich-quick merhcants have come close to ruining the financial structures built up by men and women in the North of England by careful investment.

"The people who did this shouldn't get away scot free with their bonuses and big salaries."

"There ought to be a public inquiry into what has happened."

CAPTION(S):

BANKS IN CRISIS: Huddersfield MP Barry Sheerman will be meeting the Chancellor of the Exchequer Alistair Darling to ensure jobs and investments are preserved