UK Tax payers own another bank
September 29th, 2008 | by admin |Bradford & Bingley, Lehman… who’s next?
Troubled high street bank Bradford & Bingley has been nationalised. An announcement is expected to the effect that B&B – the latest global credit crunch casualty – will be sold almost immediately to another bank chain or a consortium of leading banks.
Prospective buyers for the demutualised building society are reported to include the leading Spanish bank, Santander as well as UK based HSBC and Barclays. However, reports also say that B&B’s £50 billion loan portfolio will not be sold on and will be nationalised on a long-term basis under the special legislation that was passed to acquire Northern Rock into the public ownership portfolio earlier this year.
In the last week, B&B’s share prices have plummeted and around 370 jobs are to be axed due to problems in the UK mortgage market. Liberal Democrat treasury spokesman, Vince Cable, said, ‘Bradford and Bingley’s problems are a predictable consequence of the collapsing housing bubble built on a toxic mix of buy to let speculation and self certified mortgages.’
He added, ‘The best option would be for Bradford & Bingley to be acquired by another private bank but if the worst comes to the worst and the takeover by Northern Rock goes ahead then the Government must learn from its previous mistakes and avoid the months of dithering that caused serious damage last time.’
Lehman Bros subsidiary company Capstone Mortgage Services is also facing the threat of closure. The company currently employs 950 staff at its High Wycombe site in Buckinghamshire, and other jobs are at risk at sites in London which carry out essential administration of home loans. If Capstone does collapse, it would be impossible to find out whether borrowers’ mortgage payments had been made or not.
With Lehman Bros in Chapter 11 bankruptcy in America – and its UK arm in administration and seemingly without funds – there is a real risk that Capstone could run out of cash, according to industry experts who are wondering right now, who’s next?
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