/ 28 September 2008

UK may nationalise B&B bank

Britain could nationalise troubled mortgage lender Bradford & Bingley in the third rescue of a major bank this year, with a decision possible later on Sunday, people familiar with the matter said.

The Treasury is leading talks on the rescue of the bank and is likely to opt to nationalise it and look to sell its savings business and branches to a commercial rival, the people said.

A final decision has not yet been made, but a plan will be announced on Sunday or early Monday, they said.

The Treasury would prefer a private-sector rescue for Britain’s ninth biggest mortgage provider but nationalisation is a more likely outcome, one person familiar with the talks said.

The BBC said B&B will be nationalised and its mortgage book merged with Northern Rock, the lender taken under state ownership in February.

The government this month brokered the takeover of HBOS, Britain’s biggest home lender, by rival Lloyds TSB.

B&B is the latest bank to be hit by a global financial crisis, which was sparked by losses on poor quality United States home loans and has claimed a number of high-profile victims in the US and Europe.

The crisis and Britain’s weakening economy have heaped pressure on British Prime Minister Gordon Brown, whose party lags the opposition Conservatives in opinion polls and whose leadership has been questioned by some in his own party. — Reuters