Stricken Bradford & Bingley today became the second British bank to be nationalised as the credit crunch continued to cut a swathe through the global economy.
Chancellor Alistair Darling confirmed the bailout after attempts to sell the business failed.
And today Prime Minster Gordon Brown said he would do “whatever it takes” to ensure the stability of the financial system in the wake of the move.
The Prime Minister said the Government had taken “decisive action” to protect depositors while safeguarding the interests of the taxpayer.
The agreement means taxpayers’ money will be used to rescue yet another troubled mortgage lender, just months after Northern Rock was taken into public ownership.
The bank’s £50 billion of loans - including £41.3 billion mortgage book, many of which are buy-to-let - will be taken over by the Government - leaving taxpayers to cover the cost of any defaults.
Its 200 branches and £22 billion in savings accounts will be sold for £612 million to Spanish banking giant Santander which owns Abbey and recently bought Alliance & Leicester.
The deal came as latest figures showed:
- Mortgage lending dived to just £143 million during August, only five per cent of the previous month’s total.
- Homes are selling for a record discount as house prices continue to tumble.
- The number of people on waiting lists for affordable housing in rural areas has soared by more than a third in the past five years.
- Profits and business volumes among the UK’s financial services firms are tumbling at a record rate, according to the CBI.
The Bradford & Bingley deal was thrashed out after a weekend of talks between the Treasury, the Bank of England and the Financial Services Authority.
Mr Darling said: “Letting Bradford & Bingley go down would have destabilised the entire system. We needed to take decisive action - that is what we have done.”
But shadow chancellor George Osborne condemned the move as a levy on ordinary taxpayers to support and protect the investments of millionaire bankers who have been taking home seven-figure bonuses.
By Sunita Patel
8 Comments
Yet another scheme where the government [ i/e we the public ] have taken over all the bad debts and given the savings away to a foreign investor. I trust that they are going to extend the scheme to the general public and write off all the HP/credit card debts that people have taken on but can`t afford.
I have been worried for years about the way the banks have lent up to 125% of the collateral on assets to people with doubtful credit scores but have been assured by “bright young things” that this is because I do not have a degree and am not therefore clever enough to understand the way finance works!
I just hope the so-called “fat cat bosses” do not get any bonus payments, because they do not deserve any now, for past performance (which is pathetic) or in the future.
how many more charity shops will there be in shropshire towns to replace, abbey, alliance and leicester, halifax, bradford and bingley etc. i do hope all the staff will find jobs
who cares - we will be ok, i suggest you put your savings into bonds and gold - just be glad we can get rid of gordon now and then we can all start playing the market again
tory boy my money is in gold and dinky toys, my money is also on gordon brown to win the next 2 elections. no vacancies and no room for ruddy novices, though i think they have novices in a nunnery, now there is an opening for diddy david and george, bit of surgery tweaking first i suggest!1
If roadrunner wants to educate himself about what’s wrong with the international financial system, then I recommend ‘The Coming First world Debt Crisis’ by Ann Pettifor, which was published in 2006.
the government are not rescuing banks by nationalising them, they are buying up struggling businesses that will be worth huge amounts of money in a few years then they will sell/re-privatise them and we will see none of it.
a trick they learnt from the conservatives i think you’ll all find
I think that you will find that this money will go into schools and hospitals.
Even if twisting my melon has no children to educate or sick relatives who need free health care, surely he/she does not begrudge our money going to educating others or helping those who are less well-off.