Reports: UK set to nationalize 2nd bank

By: AP
By: AP

LONDON, England (AP) -- The troubled mortgage lender Bradford & Bingley is to be nationalized and sold off in parts, British media reported Sunday.

Bradford & Bingley has already cut 370 jobs.

Treasury officials and financial regulators have held talks all weekend over the future of the bank. Bradford & Bingley spokesman Tony McGarahan said an announcement would be made before the stock market opened Monday but the company would not comment Sunday on the media reports.

The British government is likely to take on the bank's toxic loans and fold them into Northern Rock, another mortgage lender nationalized by the British government in February, the BBC and other media reported. The BBC said the Treasury will then try to sell the company's 200 branches and savings business to other banks.

Bradford & Bingley specializes in buy-to-let mortgages for rental properties, now considered one of the most volatile parts of Britain's troubled housing market. Investors who took out loans to buy apartments and rent them out now find the value of their property has fallen and that rental income does not cover their mortgage payments.

Bradford & Bingley said last week it was cutting 370 jobs as a response to the worsening economy but that was not enough to save the institution.

The bank's shares have plunged from around 300 pence at the start of the year to 20 pence (32 U.S. cents) Friday, amid fears that it is overexposed to Britain's falling housing market. Watch how U.S. woes affect the UK »

The country's biggest mortgage lender HBOS has already fallen victim to the credit crunch, and was taken over by rival Lloyds TSB in a $21.85-billion deal on September 18.

The property Web site Rightmove reported last week that house prices in Britain fell for the fourth consecutive month in September, and another respected survey showed that home sales in Britain fell to a 30-year low in August.

Average house prices across the country fell 1 percent in September to £227,438 ($419,357). New listings per real estate agent dropped to the lowest level for September that the index has ever recorded.


Comments are posted from viewers like you and do not always reflect the views of this station.
powered by Disqus
631 SW Commerce Pl. Topeka, Kansas 66615 phone: 785-272-6397 fax: 785-272-1363 email: feedback@wibw.com
Gray Television, Inc. - Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 29869624