Nationalisation of mortgage business and sale to Santander will safeguard customers' savings
The Treasury has announced the nationalisation of Bradford & Bingley's mortgage business.
Under the government's bailout plan for the beleaguered bank, the retail arm will be sold to Spanish bank Santander for 拢600m, safeguarding customers' savings.
In the plans, announced by the chancellor, Alistair Darling, this morning, the government will provide a 拢20bn loan until the mortgages are redeemed. The mortgages are mainly inherently riskier buy-to-let and self-certified products.
Darling said that taxpayers will not have to fund the bailout. If there is a shortfall in mortgage payments, then the balance of up to 拢15bn will be collected from the banking industry under the bank compensation scheme.
However, said Darling, in the event of such a shortfall, they money would not be collected from banks until the overall financial environment improves.
Defending the plan on Radio 4 this morning, Darling said: 鈥淭o have let the Bradford & Bingley go down would have destabilised the whole system. The government has to provide this stability.鈥�
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