B&B is the last former building society to lose its indep- endence.
The intervention came after much speculation that the lender was struggling to meet its requirements as a safe home for its £14bn savings business.
Last week, B&B revealed it was shutting down its Mortgage Express processing centre in Hertfordshire and was axing its in-store mortgage advisers. Its assets were also significantly downgraded by the ratings agencies to one notch above junk status. The final straw came when B&B’s share pricing fell to 16.75p, its lowest since the bank demutualised and floated in 2000.
The tripartite reacted to the bank’s situation by transferring its savings arm and bran- ches to Banco Santander, owners of Abbey and former demutualised bank Alliance & Leicester. Santander will hold £20bn for 24 million savers in the UK and have 1,286 branches.
The Government took control of the rest of B&B’s interests, namely its mortgage and loan business constituting £41bn in mortgages, the Mortgage Express intermediary business and the B&B headquarters and staff. It did this by using powers bestowed upon it in the wake of the Northern Rock nationalisation earlier this year.
This move was funded by the Government and the Financial Services Compensation Scheme using £612m from the Bank of England. It says it will wind down operations and sell off any assets to pay back the debt to the Bank of England.
Chancellor Alistair Darling said on BBC’s Today programme: “The regulator said B&B could not continue as a bank so we took quick action. The Government has a role to ensure stability.
“We had no other options in this case – either find a commercial solution for the bank or frankly for the Government to intervene. Thinking that any other options were viable is clutching at straws.”