The U.K. Treasury announced today that it has transferred part of Bradford & Bingley's (B&B) business to Abbey National. The remainder of B&Bs business will remain in public ownership.
B&Bs UK and Isle of Man retail deposit business along with its branch network will run as normal under Abbey. This transfer follows an auction process conducted over the weekend as the U.K. mortgage lender found itself under increasing pressure that it could no longer carry on as an independent institution. The Financial Service Authority (FSA) determined on Saturday morning that the firm no longer met its threshold conditions for operating as a deposit taker under the Financial Services and Markets Act 2000 and FSA rules. The Government, on the advice of the FSA and the Bank of England, acted immediately to maintain financial stability and protect depositors, while minimizing the exposure to taxpayers.
B&Bs mortgage book, personal loan book, headquarters and relevant staff, treasury assets and its wholesale liabilities - will be taken into public ownership through the transfer to the Treasury of the company's shares. The U.K. Treasury and the Financial Services Compensation Scheme will recover payments in the wind-down of the remainder of B&B. To provide assurance to wholesale depositors and borrowers, and to preserve financial stability in this case and maximize proceeds in the wind-down, the Government has put in place guarantee arrangements for six months to safeguard certain wholesale borrowings and deposits with B&B, explained the U.K. Treasury in a statement. It is the Government's current intention to seek state aid approval from the European Commission to extend these guarantees arrangements as part of the restructuring of B&B.