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B&B Taken Into Government Control
Bradford & Bingley (B&B) has become the second bank in the UK to be bailed out by the government, as a result of the credit crunch.
Shares in the lender, heavily exposed to the faltering buy-to-let market in the UK, had plunged over recent days due to market concerns over its financial stability. Santander, owners of Abbey, will now take over B&B's branch network, with the bank's £50 billion mortgage book being passed into government hands.
B&B stock has dropped by 95 percent since the beginning of the year, with mortgage rates, defaults and repossessions on the rise. The recent chaos in the financial markets, with the bankruptcy of Lehman Brothers and the "shotgun wedding" takeover of HBOS by Lloyds TSB, has also exerted significant downwards pressure on the share price recently.
City rumours had previously suggested that the regulator, the Financial Services Authority, was touting the failing firm around to potential buyers in a bid to avoid passing B&B's liabilities over to the government. This has apparently been unsuccessful.
The end of B&B mirrors the customer bank run on Northern Rock last year, with the Newcastle-based firm taken also into government hands after a failed search for a private buyer.
Announcing the nationalisation yesterday in a statement, the treasury said: "Following recent turbulence in global financial markets, B&B has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution."
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