Page last updated at 08:16 GMT, Monday, 29 September 2008 09:16 UK

Q&A: Bradford & Bingley

Bradford & Bingley branch
Branches will now be run by the Abbey

The UK's 8th busiest mortgage lender last year - the Bradford and Bingley - has been nationalised.

The authorities decided it was no longer a viable bank, after the recent collapse in its share price, and a developing run on its funds by savers.

The branch network and savings are being moved to the much larger Abbey, owned by the Spanish bank Santander.

The rest, such the mortgages and head office, are now owned by the state. Shares in the firm have been suspended.

Is my money safe?

If you are a saver, yes. Your accounts, with the money in them, have now been transferred to the Abbey, along with the branches, call centres and internet operations.

Graphic showing who owns what
The government says it is "business as usual" so the branches will open as normal and the staff, who are now Abbey employees, have been asked to turn up as normal too.

What about my B&B mortgage?

If you have a mortgage or other loan with the B&B you still owe the money and you must continue to make your regular repayments.

This is not a once in a lifetime opportunity for you to escape your debts.

But you are now paying to a bank owned by the government, not a bank owned by shareholders.

Is the B&B insolvent?

Actually no. Which you might think is a bit odd, considering all the fuss about the bank's future, and now its nationalisation and dismemberment.

Its assets still appear to be higher than its debts.

But the lack of confidence in the B&B's ability to keep going was on the verge of becoming reality.

Banks rely absolutely on public and investor confidence to operate, because if everyone asked for their money back all at once, no bank would have enough money to meet the demand as they lend a lot of it out and cannot recall it instantly.

Are any other banks in similar trouble?

The entire banking system is still in trouble.

But it appears, so far, that there are no other UK banks quite in the tricky situation that the Bradford & Bingley, and the Northern Rock, found themselves.

Even so, we do not know what may be lurking in the financial undergrowth.

Two small building societies were bailed out recently, with no prior warning, and taken over by the Nationwide.

The best advice is if you have more than 35,000 in savings, make sure it is spread around among different savings institutions (that are not all part of the same group) so all your money is covered by the Financial Services Compensation Scheme (FSCS).

So people who are account holders with the Bradford & Bingley, as well as the Abbey and Cahoot (its internet bank), will be covered, but only for the first 35,000 of their savings.

Quite a few banks have disappeared, haven't they?

Yes. The past year has seen the Northern Rock, B&B, Alliance & Leicester and HBOS lose their independence.

So what? Well, if you add in the smaller mortgage lenders who specialised in lending via mortgage brokers only, more than 40% of the mortgage lending capacity of the UK financial services industry that existed in 2007 has evaporated or been swallowed up by rivals.

That is a big contraction in competition and must mean less choice and more expensive deals.

Will the Bradford & Bingley name disappear?

The B&B says there are no plans to change the name. But ultimately that will be for the new owners to decide.

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