Last night the Government acquired all the shares in Bradford & Bingley, and brokered a deal so the group’s £14bn savings business and branches have been transferred to the Banco Santander, owners of Abbey and Alliance & Leicester.
The transfer follows a competitive auction process for this part of the business, conducted by Morgan Stanley on behalf of HM Treasury. The remainder of Bradford & Bingley’s business will be taken into public ownership.
The transfer to Abbey will mean it has a £20bn retail deposit base with 2.7 million extra customers, bringing it’s saver base to around 24 million savers.
It will also have 197 more retail branches, meaning Abbey will have 1,286 retail branches in the UK.
The acquisition price will be £612 million, including the transfer of £208 million of capital relating to offshore companies.
This action by the Tripartite authorities, protects savers’ money by transferring their money to Abbey. B&B says its branches, call centres and internet operations will be open for business as usual to provide continuity of service to customers.
The FSA determined on Saturday morning that B&B no longer met its threshold conditions for operating as a deposit taker.
The transfer of the retail deposit book has been backed by cash from HM Treasury and the Financial Services Compensation Scheme. Further details about these arrangements are set out below.
The remaining assets and liabilities of B&B – mainly comprising of its mortgage book, personal loan book, headquarters and relevant staff, and treasury assets and its wholesale liabilities – will be taken into public ownership through the transfer to the Treasury of the company’s shares. HM Treasury and the Financial Services Compensation Scheme will recover payments in the wind-down of the remainder of B&B.
The Government has put in place guarantee arrangements for six months to safeguard certain wholesale borrowings and deposits with B&B.
The FSCS has been triggered following the failure of B&B to meet its regulatory requirements, prior to the making of the Transfer Order.
The Treasury has made a payment to Abbey for retail deposit amounts not covered by the FSCS, amounting to approximately £4bn, to be transferred to Abbey.
In the initial period of public ownership the senior management team of B&B will remain in place to manage the transition, with Richard Pym remaining chief executive.
The Treasury says it sought a range of private sector solutions before taking this action.