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FSA in talks to find buyer for B&B
The City regulator is involved in secret talks to engineer a takeover of Bradford & Bingley as it seeks a permanent solution to secure the future of the embattled buy-to-let mortgage lender, The Sunday Telegraph has learned.
By Mark Kleinman
Last Updated: 11:58AM BST 22 Sep 2008
In the wake of a tumultuous week in global equity and credit markets which saw HBOS, Britain's biggest home-loan provider, agree an emergency sale to Lloyds TSB, the Financial Services Authority (FSA) is understood to have been in contact with Santander, the Spanish banking group that owns Abbey and has just bought Alliance & Leicester; ING, the Dutch banking group; and National Australia Bank, which owns the Yorkshire and Clydesdale banks, to gauge their interest in a takeover of B&B.
The FSA's conversations with prospective buyers of B&B will be viewed as a positive move by the City because of concerns about the long-term viability of financial institutions that rely on wholesale funding amid a liquidity squeeze such as the one that has gripped markets worldwide. The FSA declined to comment last night.
People close to the companies that have spoken to the FSA about B&B say the regulator is working with the bank's board to find a long-term solution to the challenges it has faced in recent months, including a rights issue that had to be restructured twice and concerns about its ability to fund its lending.
It was not clear last night whether the three companies have the appetite to do a deal with B&B or at what price any takeover might be pitched. People close to Santander said it was unlikely to be interested in B&B.
Sources close to B&B said the company was not currently in takeover talks and that a deal was not imminent. They also pointed out that B&B was adequately funded and that depositors' money was safe.
B&B shares soared along with other financial stocks on Friday as investors digested the FSA's ban on short-selling of bank shares and the US government's plan for a bailout of the financial sector, which will involve taking hundreds of billions of dollars of bad loans off banks' balance sheets.
Despite that, B&B's new chief executive, Richard Pym, who previously ran A&L, is open to finding a buyer. Last week, Moody's, the credit rating agency, downgraded B&B debt to one notch above junk status, underlining concerns about its financial health. As a result, the company is likely to shrink new mortgage-lending activity and focus on growing its retail deposit base.
B&B, which declined to comment, has had a torrid year. Its former chief executive, Steven Crawshaw, was forced to step down because of ill-health in the middle of a rights issue that had to be overhauled when TPG, the private equity group, opted against buying a minority stake in the company.
Last week, shares in HBOS slumped amid funding fears, prompting the Government to intervene by paving the way for an emergency takeover by Lloyds TSB.
A waiver of competition law in the banking sector was viewed by analysts as a sign of desperation in Downing Street to avoid a run on B&B like that which triggered the near-collapse of Northern Rock last year.
The City regulator is involved in secret talks to engineer a takeover of Bradford & Bingley as it seeks a permanent solution to secure the future of the embattled buy-to-let mortgage lender, The Sunday Telegraph has learned.
By Mark Kleinman
Last Updated: 11:58AM BST 22 Sep 2008
In the wake of a tumultuous week in global equity and credit markets which saw HBOS, Britain's biggest home-loan provider, agree an emergency sale to Lloyds TSB, the Financial Services Authority (FSA) is understood to have been in contact with Santander, the Spanish banking group that owns Abbey and has just bought Alliance & Leicester; ING, the Dutch banking group; and National Australia Bank, which owns the Yorkshire and Clydesdale banks, to gauge their interest in a takeover of B&B.
The FSA's conversations with prospective buyers of B&B will be viewed as a positive move by the City because of concerns about the long-term viability of financial institutions that rely on wholesale funding amid a liquidity squeeze such as the one that has gripped markets worldwide. The FSA declined to comment last night.
People close to the companies that have spoken to the FSA about B&B say the regulator is working with the bank's board to find a long-term solution to the challenges it has faced in recent months, including a rights issue that had to be restructured twice and concerns about its ability to fund its lending.
It was not clear last night whether the three companies have the appetite to do a deal with B&B or at what price any takeover might be pitched. People close to Santander said it was unlikely to be interested in B&B.
Sources close to B&B said the company was not currently in takeover talks and that a deal was not imminent. They also pointed out that B&B was adequately funded and that depositors' money was safe.
B&B shares soared along with other financial stocks on Friday as investors digested the FSA's ban on short-selling of bank shares and the US government's plan for a bailout of the financial sector, which will involve taking hundreds of billions of dollars of bad loans off banks' balance sheets.
Despite that, B&B's new chief executive, Richard Pym, who previously ran A&L, is open to finding a buyer. Last week, Moody's, the credit rating agency, downgraded B&B debt to one notch above junk status, underlining concerns about its financial health. As a result, the company is likely to shrink new mortgage-lending activity and focus on growing its retail deposit base.
B&B, which declined to comment, has had a torrid year. Its former chief executive, Steven Crawshaw, was forced to step down because of ill-health in the middle of a rights issue that had to be overhauled when TPG, the private equity group, opted against buying a minority stake in the company.
Last week, shares in HBOS slumped amid funding fears, prompting the Government to intervene by paving the way for an emergency takeover by Lloyds TSB.
A waiver of competition law in the banking sector was viewed by analysts as a sign of desperation in Downing Street to avoid a run on B&B like that which triggered the near-collapse of Northern Rock last year.
