European Regulators have given the all clear to the rescue of Bradford and Bingley, confirming it didn’t violate rules on government aid to companies. The British government announced the part nationalisation of the mortgage lender on Monday, with the government taking over the lender’s £50 billion mortgage and loan books. The government also shelled out £18 billion to push through the sale of Bradford and Bingley’s entire retail branch network and savings business, for which Santander will pay £612 million.
The European Commission confirmed, ‘The measures described can be authorized as rescue aid in line with the EU guidelines on state aid for rescuing and restructuring or liquidating firms in difficulty’. Whilst the funding represents state aid, the EU confirmed it could be permitted as EU rules allow for urgent structural measures. Furthermore, as Santander had paid the market price, they technically didn’t receive any state aid.
Bradford and Bingley has been described as a one trick pony by some financial commentators, due to its dependence on buy to let mortgages . This dependence left the lender particularly vulnerable to the credit crunch, as the increasing mortgage rates have meant that investors are unable to cover their mortgage payments with their rental income.
Government Bank Rescue Given All Clear by EU
Financial Services > e-banking > Banking news
Government Bank Rescue Given All Clear by EU
Mon, 06 Oct 2008
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