Bradford & Bingley to be nationalized
Monday, September 29, 2008
Troubled mortgage lender Bradford & Bingley is to be nationalized, according to the Treasury. The Government will be taking over the bank's £60 million mortgage and loan books and Spanish banking giant Santander will be taking over its retail deposits and branch network...
The Government's move is an attempt to preserve the country's financial stability in a time of global economic turmoil.
Chancellor Alistair Darling has lined up Spanish bank Santander to buy B&B's 200 branches and £22 billion worth of savings. Meanwhile, £41 billion of mortgages have been taken into state hands.
Last week, Santander agreed to take over Alliance & Leicester, and it also owns Abbey, which will bring its total UK branches to more than 1,200.
Alistair Darling told the BBC the reasons behind the nationalization were to ‘stabilize the system, as had they let Bradford & Bingley go down it would have destabilized the entire system, especially given what's going on in the world at the moment.'
The BBC said the Treasury will then try to sell the company's 200 branches and savings business to other banks.
Dan Johnson, Director of TheMoveChannel.com, said, "One of the largest mortgage lenders has been eliminated from the marketplace, thus removing a large chunk of lending options, which may make it more expensive for investors to get the finance they require.
"However, there is some good news. The nationalisation of Bradford & Bingley does mean that potentially bad debts will be removed from the market. This should ensure that they will be less concerned about lending to each other, which in turn should help return some liquidity to the market," added Mr Johnson.
It is widely believed that the Government will combine Bradford & Bingley bad debts with those of Northern Rock, the infamous mortgage lender that was nationalized by the in February of this year, giving the Government £100 billion of Northern Rock mortgages. HBOS PLC sold itself to Lloyds TSB Group PLC earlier this month.
Bradford & Bingley specializes in buy-to-let mortgages for rental properties, now considered one of the most volatile parts of Britain's troubled housing market. There are fears that this new nationalization will add billions to Britain's worsening national debt. The bank's shares have plunged from around 300 pence at the start of the year to 20 pence B&B's shares will be suspended at 20p and its shareholders left with nothing.
Paul Bartlett, Sales Director at EM Concepts, which have spent ten years managing private clients' international property investments, told TheMoveChannel.com, "Although it comes as no surprise to the markets - the Bradford & Bingley nationalisation will no doubt heap more doubt onto any potential new entrants to the UK property market and exasperate distrust in the credit markets further.
"Increasing underlying mortgage rates will make it harder for those wanting to purchase a property in the UK raise the necessary finance. It may create opportunities to help some buyers cash in on sellers fears and pick up a heavily discounted property.
"Current turbulence will affect a large number of Anglo Saxon property markets that have been afflicted with overexposure to bad debt for some time.
"Buyers shouldn't jump into offerings which look attractive on the surface without first looking in depth at the local market and the problems it may be facing.
"In our opinion only countries with immature mortgage markets which have good current account balances, strong local demand and steady growth, even in these turbulent times, should be considered.
"Partnering with a company that takes careful consideration over its markets is key and only those who do the strictest due diligence should be listened to," Mr Bartlett added.
Another viewpoint was from Giles Cook, Area Director at Chesterton, who told TheMoveChannel.com, "The Bradford and Bingley nationalisation will have an impact on consumer confidence but not nearly as much as people may think. Its effect on the property market is just a ripple in an ever-widening pool of turmoil.
"Seven months after Northern Rock, this is another blow, another headline hitting the front pages. But this time there are no images of panicked customers queuing in the streets.
"The key question is whether or not £350 billion financial package in America is sufficient to prevent a worldwide recession or are we just at the tip of a widening financial disaster?
"Recent experience has taught the government what they can do in these situations and they are able to swoop in and manage expectations.
"In summary, there is a general perception that help is at hand which should be reflected in a stabilising property market," Mr Cook added.
Monday, September 29, 2008
Troubled mortgage lender Bradford & Bingley is to be nationalized, according to the Treasury. The Government will be taking over the bank's £60 million mortgage and loan books and Spanish banking giant Santander will be taking over its retail deposits and branch network...
The Government's move is an attempt to preserve the country's financial stability in a time of global economic turmoil.
Chancellor Alistair Darling has lined up Spanish bank Santander to buy B&B's 200 branches and £22 billion worth of savings. Meanwhile, £41 billion of mortgages have been taken into state hands.
Last week, Santander agreed to take over Alliance & Leicester, and it also owns Abbey, which will bring its total UK branches to more than 1,200.
Alistair Darling told the BBC the reasons behind the nationalization were to ‘stabilize the system, as had they let Bradford & Bingley go down it would have destabilized the entire system, especially given what's going on in the world at the moment.'
The BBC said the Treasury will then try to sell the company's 200 branches and savings business to other banks.
Dan Johnson, Director of TheMoveChannel.com, said, "One of the largest mortgage lenders has been eliminated from the marketplace, thus removing a large chunk of lending options, which may make it more expensive for investors to get the finance they require.
"However, there is some good news. The nationalisation of Bradford & Bingley does mean that potentially bad debts will be removed from the market. This should ensure that they will be less concerned about lending to each other, which in turn should help return some liquidity to the market," added Mr Johnson.
It is widely believed that the Government will combine Bradford & Bingley bad debts with those of Northern Rock, the infamous mortgage lender that was nationalized by the in February of this year, giving the Government £100 billion of Northern Rock mortgages. HBOS PLC sold itself to Lloyds TSB Group PLC earlier this month.
Bradford & Bingley specializes in buy-to-let mortgages for rental properties, now considered one of the most volatile parts of Britain's troubled housing market. There are fears that this new nationalization will add billions to Britain's worsening national debt. The bank's shares have plunged from around 300 pence at the start of the year to 20 pence B&B's shares will be suspended at 20p and its shareholders left with nothing.
Paul Bartlett, Sales Director at EM Concepts, which have spent ten years managing private clients' international property investments, told TheMoveChannel.com, "Although it comes as no surprise to the markets - the Bradford & Bingley nationalisation will no doubt heap more doubt onto any potential new entrants to the UK property market and exasperate distrust in the credit markets further.
"Increasing underlying mortgage rates will make it harder for those wanting to purchase a property in the UK raise the necessary finance. It may create opportunities to help some buyers cash in on sellers fears and pick up a heavily discounted property.
"Current turbulence will affect a large number of Anglo Saxon property markets that have been afflicted with overexposure to bad debt for some time.
"Buyers shouldn't jump into offerings which look attractive on the surface without first looking in depth at the local market and the problems it may be facing.
"In our opinion only countries with immature mortgage markets which have good current account balances, strong local demand and steady growth, even in these turbulent times, should be considered.
"Partnering with a company that takes careful consideration over its markets is key and only those who do the strictest due diligence should be listened to," Mr Bartlett added.
Another viewpoint was from Giles Cook, Area Director at Chesterton, who told TheMoveChannel.com, "The Bradford and Bingley nationalisation will have an impact on consumer confidence but not nearly as much as people may think. Its effect on the property market is just a ripple in an ever-widening pool of turmoil.
"Seven months after Northern Rock, this is another blow, another headline hitting the front pages. But this time there are no images of panicked customers queuing in the streets.
"The key question is whether or not £350 billion financial package in America is sufficient to prevent a worldwide recession or are we just at the tip of a widening financial disaster?
"Recent experience has taught the government what they can do in these situations and they are able to swoop in and manage expectations.
"In summary, there is a general perception that help is at hand which should be reflected in a stabilising property market," Mr Cook added.
posted by tony at 9:58 PM
0 Comments:
Post a Comment
<< Home