EMILY FLYNN VENCAT
Associated Press
September 29, 2008
The British government is nationalizing troubled mortgage lender Bradford & Bingley, the Treasury confirmed Monday, taking over the bank’s 50 billion pound ($91 billion) mortgage and loan books as turmoil from the U.S. credit crisis spread across Europe.
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The sweeping move is intended to preserve financial stability, Prime Minister Gordon Brown told reporters at his Downing Street office.
“We will work night and day to make sure that Britain can come through fairly this downturn,” Brown said.
The move comes hours after Dutch-Belgian banking giant Fortis NV was partially nationalized with a 11.2 billion euros ($16.4 billion) rescue from the governments of Belgium, the Netherlands and Luxembourg, after investor confidence in the bank disappeared last week. Germany’s second biggest commercial property lender, Hypo Real Estate Holding AG, said Monday it had secured a multibillion euro line of credit from several banks, as the financial turmoil in the United States spread further in Europe.
The government has also paid out 18 billion pounds ($33 billion) 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 ($1.1 billion) for Bradford & Bingley’s 197 branches and 20 billion pounds of deposits.
Bradford & Bingley is the third major British bank to run into trouble since credit crunch began just over a year ago. Northern Rock PLC was nationalized in February, and HBOS PLC sold itself to Lloyds TSB Group PLC on Sept. 18, to stem a sharply falling share price.
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