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Deposit-taking firms to pay 450m for B&B’s collapse

Deposit-taking firms will need to stump up more than 450m in Financial Services Compensation Scheme levies next year following Bradford & Bingley’s collapse compared with the 5m they contributed this year.

The FSCS borrowed 14bn from the Bank of England to pay for retail deposits to be transferred from B&B to Abbey. Interest-only repayments are required for the first three years, with the first payment estimated at 450m due in September 2009.

A spokeswoman says: “Next year in excess of 450m will need to be raised from deposit-taking firms to cover the cost of the interest repayment.”

The FSCS says it is unlikely that any other firms, including IFAs, will be affected until 2011. At that point a payment schedule will be implemented to repay the principal loan amount. However, the FSCS is unsure who will be required to make payments.

A spokeswoman says the schedule may run over several years so it is “highly unlikely” that the payments required will exceed the maximum amount that the FSCS can levy deposit-holding firms, which is currently 1.84bn.

But she says if more money is needed after three years it may “dip into” the general retail pool.

She says: “It is too early to say at this time whether levies will increase for IFAs to pay for this loan after the initial three years. But we will also be making recoveries from B&B so all the money received will be used to reduce the loan.”


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