LONDON – Troubled UK bank Bradford & Bingley has been nationalised. The outlook for shareholders is grim, as they must await a Treasury valuation of their remaining assets within the UK savings and mortgage bank. A deal has been struck to sell off the bank’s savings arm to Santander-owned UK subsidiary Abbey, while the government retains control of the bank’s remaining operations.
The UK Treasury said it acted to nationalise the bank in the interests of financial stability, and on the recommendations of its tripartite supervisory partners, the Bank of England and the Financial Services Authority.
The Treasury has provided £4 billion to Abbey to cover retail deposits – principally in the bank’s loan book and mortgage business – while the Financial Services Compensation Scheme (FSCS) has stepped in with an additional £14 billion in funds to protect remaining retail deposit holders. The FSCS was created in 2000 as the independent UK protection fund of last resort, funded by levies from the firms it covers.