| Former type | Public |
|---|---|
| Industry | Finance |
| Fate | Nationalised due to insolvency. Its deposits were sold to Abbey, which was eventually renamed with its parent's name, Santander. Its mortgages are still held by Bradford & Bingley. |
| Founded | 1964 |
| Defunct | 2009 |
| Headquarters | Bingley, West Yorkshire, UK |
| Key people | Richard Pym, Executive Chairman[1] |
| Products | Financial Services |
| Operating income | £572.3m (2007) |
| Profit | £93.2m (2007) |
| Employees | 2,862 (FTE in 2007) |
| Parent | HM Government (UKFI / UK Asset Resolution Ltd), Santander UK plc |
| Website | http://www.bbg.co.uk http://www.bradford-bingley.co.uk |
Bradford & Bingley plc is a British bank with headquarters in the West Yorkshire town of Bingley. In 2008, partly due to the credit crunch, the bank was nationalised and in effect split into two parts; the mortgage book remained with the now publicly owned Bradford & Bingley plc, and the deposits and branch network (and a licence to use the B&B name for those aspects) was sold to Abbey National, itself owned by the Spanish bank Grupo Santander. Since 11 January 2010 the branch network has been rebranded Santander and the Bradford & Bingley name now solely relates to the nationalised section of the bank.
The bank was formed in December 2000 by demutualisation of the Bradford & Bingley Building Society following a vote of the building society's members, who swapped their nominal share of the building society for at least 250 shares of the newly formed bank.
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Bradford & Bingley Building Society was formed in 1964 as a result of the merger of the Bradford Equitable Building Society and the Bingley Permanent Building Society, both of which were established in 1851.[2]
In May 1997, the Society bought Mortgage Express from Lloyds TSB for £64m.[3]
In December 2000, the Society demutualised and floated on the London Stock Exchange (using the symbol BB.) with former members of the Society each receiving a minimum of 250 shares worth £567.50 at the time, and savers with more savings receiving more shares worth up to £5,000 each.[2]
On 29 September 2008, after a weekend of negotiations, the British government announced that the troubled bank, whose profits were adversely affected by the credit crunch, had been part nationalised and that the Spanish bank Grupo Santander had purchased all of Bradford & Bingley's £20 billion savings business.[4][5][6]
In June 2008 to combat the effects of the subprime mortgage crisis, the Company launched a £400 million rights issue which was not well subscribed by shareholders leaving much of issue with underwriters. The issue had not been helped when TPG Capital, who had previously agreed to take a 23% stake in the Company, withdrew their support.[7]
In September 2008 due to the effects of the credit crunch, the company's share price dropped to a record low. On 25 September they announced that 370 jobs were to go.[8] The bank had also been seeking options from the Financial Services Authority (FSA) and the Government to secure the future of the company. Options included selling the company to another bank or nationalisation.[9] With Bradford & Bingley being nationalised, the structure was already in place from the legislation involved in the nationalisation of the Northern Rock bank in February (see Banking (Special Provisions) Act 2008 and Nationalisation of Northern Rock). The European regulators approved the government's rescue plan for Bradford & Bingley after just 24 hours.[10]
There were reports from various sources that Bradford & Bingley was to be nationalised in its entirety,[11] because a suitable buyer had not been found, but it later emerged that the Spanish bank Grupo Santander would acquire all of Bradford & Bingley's £20 billion (2.7 million customers) savings business.[12] The shares were suspended prior to the markets opening on Monday 29 September. Bradford & Bingley will be open as usual and the senior management team will remain.[4]
The acquisition price paid by Santander was £612 million, including the transfer of £208 million of capital relating to offshore companies. Santander bought Bradford & Bingley's 197 retail branches, 141 agencies and related employees which were transferred to its subsidiary Abbey.[13]
Bradford & Bingley's UK and Isle of Man retail deposit business along with its branch network were sold to Santander. On behalf of HM Treasury, Morgan Stanley conducted the transfer. The mortgage book, personal loan book, headquarters, treasury assets and its wholesale liabilities were taken into public ownership.[4] The bank has now been closed to new business for mortgages, although it continues to administer existing mortgages (including offers made prior to nationalisation).
When the shares closed on 26 September they were worth 20 pence each, valuing the bank at £256 million, substantially less than Santander paid for it. In March 2006 the bank had been valued at £3.2 billion.[14]
The former shareholders of Bradford & Bingley have been angered, as they (like the Northern Rock shareholders) have not been reimbursed for their shares which the Government took control of. The UK Shareholders Association noted that they had received 300 complaints from private Bradford & Bingley shareholders who have not had any communication concerning the fate of their holdings.[15] On 10 March 2009 HM Treasury began to invite applicants to act as independent valuers.[16] The BBC reported that the shareholders will be told how much compensation they are getting by June 2010.[17]
On Friday 2nd June, Peter Clokey, the Government appointed valuer, stated that he had made his decision and that he was in the process of writing to shareholders. No compensation was payable.
In November 2008 the government set up a new company, UK Financial Investments Limited, to manage their shareholdings in the Northern Rock and Bradford & Bingley.[18]
In April 2009 The Financial Times reported that Bradford & Bingley may sell assets such as its commercial loan book, to assist in the running down its £42.2bn loan book over the next ten years.[19] In October the Telegraph reported that the mortgage part of Bradford and Bingley would be mirroring the decision by Northern Rock to split their assets into good and bad assets, to attempt to pay off its £18.4 billion loan early.[20]
In May 2009 it was announced that Grupo Santander planned to merge the Abbey and Bradford & Bingley branch networks under the Santander brand at a cost of £12 million.[21][22] This completed on 11 January 2010. Alliance & Leicester will be rebranded by the end of November 2010.[23]
Following the announcement on rebranding, it was also announced that the Bradford & Bingley headquarters building would be put up for sale or sub-let.[24] The building has once been mentioned by Prince Charles as one of the ugliest in Britain. Local opinion on the building is divided.[25] Sainsbury's subsequently bought the building in 2010 and unveiled plans to convert it into a supermarket.[26]
In January 2010 it was announced that the European Commission had approved the state aid given to the bank.[27] On 24 March 2010 UKFI announced the merger of the mortgage business with the bad bank of Northern Rock, Northern Rock (Asset Management) plc.[28] On 1 October it was announced that Bradford & Bingley plc and Northern Rock (Asset Management) plc had been merged under a single holding company U.K. Asset Resolution Ltd.[29]
The group ran two distinct businesses: retail and lending.
Bradford & Bingley distributed brand-name and third party financial products. As at 31 December 2007 they had 197 branches and 140 third party agent locations offering retail products and face to face advice in addition to online and intermediary distribution.[30]
Bradford & Bingley's approach to mortgage advising was innovative as they advised on and sold other providers mortgages as well as their own from 2000 to 2006. In late 2006, as part of their aim to become the UK's leading specialist lender, Bradford & Bingley reverted to selling only their own mortgages under the Bradford & Bingley and Mortgage Express brands. In addition, Bradford & Bingley acquired mortgages from GMAC-RFC and Kensington Mortgage Group Ltd; this accounted for 44% of gross residential advances during 2007.[30]
As mentioned above, the savings operations have been transferred to Grupo Santander and have been rebranded under the Santander name.
Bradford & Bingley had its own lending products including mortgage and commercial real estate products. Bradford & Bingley International is an offshore subsidiary based on the Isle of Man, also now transferred to Grupo Santander through Abbey. Bradford & Bingley also provided loan quotes through Compare the Loan[31] for those who did not have a Bradford & Bingley branch locally. Since the takeover by HM Treasury of the lending operations, Bradford & Bingley is no longer offering new mortgages or other lending products.
Bradford & Bingley had developed Mortgage Express into a 'niche' lending brand dealing with specialist lending with more complicated underwriting requirements such as buy-to-let and self-certification mortgages. Mortgage Express is also closed to new business, following the nationalisation.[32]
Bradford & Bingley currently sponsors Yorkshire County Cricket Club[33] and Bradford and Bingley Rugby Club (formerly Bingley Bees),[34] and has previously been team sponsor of Bradford City A.F.C.[35] Valley Parade stadium had previously been known as Bradford & Bingley Stadium through sponsorship rights.
During the nationalisation process, it was revealed that the bank had registered more than 100 separate trademarks featuring the bowler hat, its long-running logo.[36] The bank had also purchased a bowler hat which had formerly belonged to Stan Laurel in 1995, for £2000.[36]
Ownership of the trademarks transferred to Santander with the licence to use the Bradford & Bingley name as part of the sale.
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