Troubled bank Bradford & Bingley is to be nationalised, the BBC has learned.
Officials from the Treasury It did not go up in a Purple Haze - Hendrix's burnt guitar auctioned ...
Depositor protection proposed ... and the Financial Services Authority (FSA) have been in talks with executives from the bank in a bid to secure its future.
BBC News business editor Robert Peston says the Treasury will almost instantaneously sell to a bank, or a number of banks.
B&B's share price has plummeted and it has announced plans to cut 370 jobs due to the downturn in the mortgage market.
Home loans
The bank will be nationalised using special legislation the Treasury put through when it took Northern Rock into public ownership earlier this year.
The measure is expected be announced on Sunday night or Monday morning.
The Treasury and FSA will negotiate with banks interested in buying parts of B&B. Possible buyers included Santander of Spain, HSBC and Barclays.
Santander, which already owns Abbey and Alliance & Leicester, has been looking at B&B for some time.
B&B's Ј50bn of loans, including Ј41bn of home mortgages, will not be sold and will be nationalised on a long-term basis. The mortgages may be given to the nationalised Northern Rock to manage.
Credit rating
The bank experienced significant withdrawals of cash from its branches and online bank on Saturday amid customer concerns about its situation.
The Treasury's decision to sell B&B's savings business means that depositors and savers' money should be safe.
However, B&B's shareholders and holders of its subordinated debt may lose out.
Our correspondent says the nationalisation and break-up of B&B represents a momentous event in the history of British banking.
He said: "It will mean that every building society that floated on the stock market in the wave of demutualisations of the past two decades will either have collapsed or been sold to a conventional bank."
B&B was perilously close to seeing a demand from investors for the return of billions of pounds, which it would have been unable to find.
Credit rating agencies had been downgrading the rating of its covered bonds, a form of funding which involves packaging up mortgages for sale to investors.
Bradford & Bingley spokesman Tony McGarahan said discussions were taking place and an announcement would be made before the Stock Market opened on Monday.
"We can assure customers that their deposits are safe with Bradford & Bingley," he said.
Do you bank with Bradford and Bingley? Are you an employee? What are your thoughts about this news? Send us your comments using the form below.
(BBC)
<< Back