B&B plays down sell-off option

The name will disappear from B&B branches by the end of 2010

The nationalised Bradford & Bingley (B&B) mortgage lender has played down suggestions that it may be split in two to raise money to repay the taxpayer.

The bank was nationalised in September 2008 to stop it collapsing, with the branches and savings arm swiftly sold to the Spanish bank Santander.

The Northern Rock, nationalised earlier, hopes soon to sell some of its mortgage business to repay taxpayers.

But a spokesman for the B&B said a similar plan for it was a long way off.

"It is not something that is going to happen anytime soon," said a spokesman.

"If at a later date when the economy picks up we will look to sell off part of the mortgage book," he explained.

This week the European Commission is expected to announce if it has approved the Northern Rock's plan to split itself in two.

This would involve selling a so-called "good bank", holding the profitable mortgages along with the existing savings business.

A "bad bank" would be kept in public ownership and would hold onto the mortgages that are in arrears or which have been used as security for loans from other lenders under the bank's securitisation programmes.

Buy-to-let

B&B was taken over in 2008 because its finances were under threat, due to a developing run by savers who were withdrawing their money at the height of the international financial crisis.

BRADFORD & BINGLEY 1851: Bradford Second Equitable Building Society and the Bingley, Morton and Shipley Permanent Benefit Building Society both formed 1964: Bradford and Bingley complete merger 2000: B&B demutualised and shares floated on London stock exchange 2008:Nationalised after being engulfed by economic crisis. Santander buys its branches and retail deposit accounts Best known for: Bowler hat-wearing Mr Bradford and Mr Bingley

The rescue involved the government lending £14.6bn to the Financial Services Compensation Scheme, which then used the money to bolster the funds that were transferred to Santander along with all the savings accounts and branches.

This was topped up with a further £4.5bn lent directly by the UK Treasury.

The government plans to recoup that money, either by waiting for the mortgage holders to redeem their loans as they gradually pay them off, or by selling off some of the mortgages to another lender.

B&B explained that its assets included £40bn of mortgage loans, 60% of which were to buy-to-let borrowers.

It also has £10bn of assets consist of cash and other capital.

Unlike the Northern Rock, few of the B&B's 300,000 borrowers have left it, mainly because other lenders are reluctant to take on new buy-to-let borrowers.

Some now have little or no equity in their properties due to falling house prices.

Some will also be in arrears, as the B&B revealed in August in its interim financial report that nearly 6% of its mortgage accounts were three months or more behind with their repayments.