BackUK mortgage bank Bradford & Bingley in trouble
UK mortgage bank Bradford & Bingley in trouble
PremiumLondoon: The troubled mortgage lender Bradford & Bingley is talking to regulators and financial institutions over its future, Britain’s Treasury confirmed on Saturday.
The mortgage bank specializes in providing buy-to-let mortgages for rental properties, now considered one of the most volatile parts of the housing market.
Investors who took out loans to buy apartments and rent them out now find that the value of their property has fallen and that rental yields do not cover their mortgage payments.
Britain’s Press Association reports that Bradford & Bingley could be taken over by another bank or be broken up and sold off in parts. Any parts of its business that cannot be sold may have to be nationalized.
A Treasury spokesman told the Press Association: “The Treasury, the FSA and the Bank of England are working with Bradford & Bingley to consider the implications for the business of the recent financial turmoil."
Bradford & Bingley said last week it was cutting 370 jobs as a response to the worsening economy and declining demand for mortgages.
The bank’s spokesman Tony McGarahan told Press Association an announcement would be made before the Stock Market opened on Monday.
“We can assure customers that their deposits are safe with Bradford & Bingley," he said.
The bank’s shares have plunged from around 300 pence at the start of the year to 20 pence (32 U.S. cents) Friday, amid fears that it is overexposed to Britain’s falling housing market.
The country’s biggest mortgage lender HBOS PLC has already fallen victim to the credit crunch, and was taken over by rival Lloyds TSB PLC in a $21.85-billion deal on 18 September.
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