Government takes on £40bn B&B mortgage debt

Bradford & Bingley, which held more than £40 billion of mortgages has been nationalised. The government has taken on the mortgage debt, while the Spanish bank Banco Santander has bought the network of 200 branches.

Chancellor Alistair Darling revealed that the nationalisation plan would cost the taxpayer an initial £4 billion. A further £14 billion government loan will be paid to the Financial Services Compensation Scheme, which will ensure the bank’s depositors do not lose out.

The Bradford & Bingley assets taken into public control include its headquarters in Yorkshire, wholesale liabilities, treasury assets, and personal loan book. During the current crisis in the housing market, it is perhaps most significant that the company’s mortgage loans will now be held by the government.

A statement from the government said it had acted “to maintain financial stability and protect depositors, while minimising the exposure to taxpayers”. The Bank of England and the Financial Services Authority both backed the deal.

The Conservatives have criticised the nationalisation, but have said they will not stand in its way when it comes before the House of Commons.

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