THE SUNDAY TELEGRAPH: Taxpayers face a multi-billion-pound bill as part of a plan to rescue the stricken mortgage lender Bradford & Bingley, it has emerged.
The biggest buy-to-let operator is on the verge of being nationalised by the Government as time runs out on attempts to find a private buyer.
B&B’s shares will be suspended when the stock market opens on Monday. By that point, the Government will either nationalise the bank or announce a deal to sell it.
Senior Treasury officials are working on a plan to take B&B into public ownership. That could be followed by a swift sale to a bank, with Santander of Spain – which also owns Abbey – seen as the favourite.
But unlike the sale of HBOS to Lloyds TSB two weeks ago, the deal will require public support, with many of the one million B&B mortgages left with the Treasury. As a result, taxpayers are likely to be left holding the mortgages most likely to default from the £40 billion portfolio.
This will increase the size of the national debt, though the ultimate bill for taxpayers is likely to be less, depending on how many B&B mortgage holders default.
Downing Street had called an emergency summit with banking chiefs to try to thrash out a solution. It is the second time in a fortnight that a major British bank has had to be rescued, fuelling fears for the fate of the banking system.
In a sign that the credit crisis is spreading through the wider economic system, the home furnishings retailer MFI also came close to collapse.
In the United States, politicians tried to reach agreement on a $700 billion (£380 billion) bail-out for American banks as insiders said that Wall Street shares could lose up to a third of their value if the talks failed. Financial Crisis: Bradford & Bingley Likely to Be Nationalised by Treasury >>> By Edmund Conway and Katherine Griffiths | September 28, 2008
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