Second UK Lender Nationalised

Mortgage lender Bradford & Bingley (B& B) has been nationalised in the latest setback for the British banking sector.

The Treasury has added B&B’s £41 billion loan book to the public balance sheet and guaranteed around £9 billion in other commitments. The move comes after Northern Rock’s nationalisation in February, which added £87 billion to the national debt.

B&B has 3,000 staff and 197 branches. Its branches and its savings business have been sold for £612 million to Spanish bank Santander. B&B has 2.7 million savings customers and £20 billion in deposits. Santander owns Abbey and recently agreed to buy Alliance & Leicester, so the deal will boost its position in the UK with 1,286 branches and a 10% share of the retail savings market.

The deal comes only 2 weeks after a £12.2 billion rescue of Halifax Bank of Scotland by Lloyds TSB was announced.

The Financial Services Authority (FSA) decided that B&B was not strong enough to continue as a deposit-taking bank due to a loss of confidence in the firm.