Bradford & Bingley Bail Out

Today the Treasury announced waht is effectively the nationalisation of Bradford & Bingley's mortgage business.

In the plans, announced by the chancellor, Alistair Darling, this morning, the government will provide a £20billion loan until the mortgages are redeemed. The mortgages are mainly inherently riskier buy-to-let and self-certified products.

The government has also paid out £18 billion pounds to facilitate the sale of Bradford & Bingley's savings business, including its entire retail branch network, to Spain's Banco Santander. Santander, the second-largest bank in Europe, said it will be paying £612 million pounds for Bradford & Bingley's 197 branches and £20 billion pounds of deposits.

Darling said that taxpayers will not have to fund the bailout. If there is a shortfall in mortgage payments, then the balance of up to £15billion will be collected from the banking industry under the bank compensation scheme.