Bradford & Bingley
Encyclopedia
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.
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.
In May 1997, the Society bought Mortgage Express from Lloyds TSB
for £64m.
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.
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.
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.
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. 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. 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.
There were reports from various sources that Bradford & Bingley was to be nationalised in its entirety, 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. 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.
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
.
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. 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.
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. On 10 March 2009 HM Treasury began to invite applicants to act as independent valuers. The BBC reported that the shareholders will be told how much compensation they are getting by June 2010.
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.
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. This completed on 11 January 2010. Alliance & Leicester
will be rebranded by the end of November 2010.
Following the announcement on rebranding, it was also announced that the Bradford & Bingley headquarters building would be put up for sale or sub-let. The building has once been mentioned by Prince Charles as one of the ugliest in Britain. Local opinion on the building is divided. Sainsbury's subsequently bought the building in 2010 and unveiled plans to convert it into a supermarket.
In January 2010 it was announced that the European Commission had approved the state aid given to the bank. On 24 March 2010 UKFI announced the merger of the mortgage business with the bad bank of Northern Rock, Northern Rock (Asset Management)
plc. 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.
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.
As mentioned above, the savings operations have been transferred to Grupo Santander
and have been rebranded under the Santander
name.
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 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.
and Bradford and Bingley Rugby Club (formerly Bingley Bees), and has previously been team sponsor of Bradford City A.F.C.
Valley Parade
stadium had previously been known as Bradford & Bingley Stadium through sponsorship rights.
, its long-running logo
. The bank had also purchased a bowler hat which had formerly belonged to Stan Laurel
in 1995, for £2000.
Ownership of the trademarks transferred to Santander with the licence to use the Bradford & Bingley name as part of the sale.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
with headquarters in the West Yorkshire
West Yorkshire
West Yorkshire is a metropolitan county within the Yorkshire and the Humber region of England with a population of 2.2 million. West Yorkshire came into existence as a metropolitan county in 1974 after the passage of the Local Government Act 1972....
town of Bingley
Bingley
Bingley is a market town in the metropolitan borough of the City of Bradford, in West Yorkshire, England. It is situated on the River Aire and the Leeds and Liverpool Canal...
. In 2008, partly due to the credit crunch
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
, 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
Abbey National
Abbey National plc was a UK-based bank and former building society, which latterly traded under the Abbey brand name. It became a wholly owned subsidiary of Grupo Santander of Spain in 2004, and was rebranded as Santander in January 2010, forming Santander UK along with the savings business of the...
, itself owned by the Spanish bank Grupo Santander
Grupo Santander
The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
. Since 11 January 2010 the branch network has been rebranded Santander
Santander UK
Santander UK plc is a wholly owned subsidiary of the Spanish Santander Group. Based in the United Kingdom, it operates under the name of Santander. Santander is the third largest bank in the UK in terms of deposits, the second largest in terms of mortgages held, and the fourth largest in terms of...
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
Building society
A building society is a financial institution owned by its members as a mutual organization. Building societies offer banking and related financial services, especially mortgage lending. These institutions are found in the United Kingdom and several other countries.The term "building society"...
's members, who swapped their nominal share of the building society for at least 250 shares of the newly formed bank.
History
In May 1997, the Society bought Mortgage Express from Lloyds TSB
Lloyds TSB
Lloyds TSB Bank Plc is a retail bank in the United Kingdom. It was established in 1995 by the merger of Lloyds Bank, established in Birmingham, England in 1765 and traditionally considered one of the Big Four clearing banks, with the TSB Group which traces its origins to 1810...
for £64m.
In December 2000, the Society demutualised and floated on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
(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.
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
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
, had been part nationalised and that the Spanish bank Grupo Santander
Grupo Santander
The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
had purchased all of Bradford & Bingley's £20 billion savings business.
Part nationalisation and sale to Santander
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
, the Company launched a £400 million rights issue
Rights issue
A rights issue is an issue of additional shares by a company to raise capital under a seasoned equity offering. The rights issue is a special form of shelf offering or shelf registration. With the issued rights, existing shareholders have the privilege to buy a specified number of new shares from...
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.
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. The bank had also been seeking options from the Financial Services Authority (FSA)
Financial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
and the Government to secure the future of the company. Options included selling the company to another bank or nationalisation. With Bradford & Bingley being nationalised, the structure was already in place from the legislation involved in the nationalisation of the Northern Rock
Northern Rock
Northern Rock plc is a British bank, best known for becoming the first bank in 150 years to suffer a bank run after having had to approach the Bank of England for a loan facility, to replace money market funding, during the credit crisis in 2007. Having failed to find a commercial buyer for...
bank in February (see Banking (Special Provisions) Act 2008
Banking (Special Provisions) Act 2008
The Banking Act 2008 is an Act of the Parliament of the United Kingdom that entered into force on the 21 February 2008 in order to enable the UK government to nationalise high-street banks under emergency circumstances by secondary legislation...
and Nationalisation of Northern Rock
Nationalisation of Northern Rock
In 2008 the Northern Rock bank was nationalised by the British Government, due to financial problems caused by the subprime mortgage crisis...
). The European regulators approved the government's rescue plan for Bradford & Bingley after just 24 hours.
There were reports from various sources that Bradford & Bingley was to be nationalised in its entirety, because a suitable buyer had not been found, but it later emerged that the Spanish bank Grupo Santander
Grupo Santander
The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
would acquire all of Bradford & Bingley's £20 billion (2.7 million customers) savings business. 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.
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
Abbey (bank)
Abbey National plc was a UK-based bank and former building society, which latterly traded under the Abbey brand name. It became a wholly owned subsidiary of Grupo Santander of Spain in 2004, and was rebranded as Santander in January 2010, forming Santander UK along with the savings business of the...
.
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
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
, Morgan Stanley
Morgan Stanley
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000....
conducted the transfer. The mortgage book, personal loan book, headquarters, treasury assets and its wholesale liabilities were taken into public ownership. 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.
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. On 10 March 2009 HM Treasury began to invite applicants to act as independent valuers. The BBC reported that the shareholders will be told how much compensation they are getting by June 2010.
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
UK Financial Investments Limited
UK Financial Investments Ltd is a company set up in November 2008 by the UK Government to manage its shareholding in banks subscribing to its recapitalisation fund. They include Lloyds Banking Group , Royal Bank of Scotland Group and Northern Rock...
, to manage their shareholdings in the Northern Rock
Northern Rock
Northern Rock plc is a British bank, best known for becoming the first bank in 150 years to suffer a bank run after having had to approach the Bank of England for a loan facility, to replace money market funding, during the credit crisis in 2007. Having failed to find a commercial buyer for...
and Bradford & Bingley.
Future
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. 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.In May 2009 it was announced that Grupo Santander
Grupo Santander
The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
planned to merge the Abbey
Abbey (bank)
Abbey National plc was a UK-based bank and former building society, which latterly traded under the Abbey brand name. It became a wholly owned subsidiary of Grupo Santander of Spain in 2004, and was rebranded as Santander in January 2010, forming Santander UK along with the savings business of the...
and Bradford & Bingley branch networks under the Santander
Santander UK
Santander UK plc is a wholly owned subsidiary of the Spanish Santander Group. Based in the United Kingdom, it operates under the name of Santander. Santander is the third largest bank in the UK in terms of deposits, the second largest in terms of mortgages held, and the fourth largest in terms of...
brand at a cost of £12 million. This completed on 11 January 2010. Alliance & Leicester
Alliance & Leicester
Alliance & Leicester was a former UK-based bank and PLC, which in later years operated as a trading name of Santander UK before being rebranded as Santander. Alliance & Leicester was legally acquired in May 2010 by Santander UK, and was fully incorporated by 2011...
will be rebranded by the end of November 2010.
Following the announcement on rebranding, it was also announced that the Bradford & Bingley headquarters building would be put up for sale or sub-let. The building has once been mentioned by Prince Charles as one of the ugliest in Britain. Local opinion on the building is divided. Sainsbury's subsequently bought the building in 2010 and unveiled plans to convert it into a supermarket.
In January 2010 it was announced that the European Commission had approved the state aid given to the bank. On 24 March 2010 UKFI announced the merger of the mortgage business with the bad bank of Northern Rock, Northern Rock (Asset Management)
Northern Rock (Asset Management)
Northern Rock plc is a British asset holding and management company which was split away from the Northern Rock bank in 2010. It is currently under public ownership, due to the bank's nationalisation in 2008...
plc. 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.
Retail
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.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
GMAC-RFC
GMAC ResCap provides capital solutions to businesses in a variety of markets. Its corporate headquarters are in Minneapolis, Minnesota...
and Kensington Mortgage Group Ltd; this accounted for 44% of gross residential advances during 2007.
As mentioned above, the savings operations have been transferred to Grupo Santander
Grupo Santander
The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
and have been rebranded under the Santander
Santander UK
Santander UK plc is a wholly owned subsidiary of the Spanish Santander Group. Based in the United Kingdom, it operates under the name of Santander. Santander is the third largest bank in the UK in terms of deposits, the second largest in terms of mortgages held, and the fourth largest in terms of...
name.
Lending
Bradford & Bingley had its own lending products including mortgageMortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
and commercial real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
products. Bradford & Bingley International
Bradford & Bingley International
Bradford & Bingley International was Bradford & Bingley's offshore finance armThe business of Bradford & Bingley International was transferred to Alliance & Leicester International on 5 August 2011. Both businesses have been part of Grupo Santander since 2008 and the transfer took place ahead of...
is an offshore subsidiary based on the Isle of Man
Isle of Man
The Isle of Man , otherwise known simply as Mann , is a self-governing British Crown Dependency, located in the Irish Sea between the islands of Great Britain and Ireland, within the British Isles. The head of state is Queen Elizabeth II, who holds the title of Lord of Mann. The Lord of Mann is...
, also now transferred to Grupo Santander
Grupo Santander
The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
through Abbey
Abbey (bank)
Abbey National plc was a UK-based bank and former building society, which latterly traded under the Abbey brand name. It became a wholly owned subsidiary of Grupo Santander of Spain in 2004, and was rebranded as Santander in January 2010, forming Santander UK along with the savings business of the...
. Bradford & Bingley also provided loan quotes through Compare the Loan for those who did not have a Bradford & Bingley branch locally. Since the takeover by HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
of the lending operations, Bradford & Bingley is no longer offering new mortgages or other lending products.
Mortgage Express
Sponsorship
Bradford & Bingley currently sponsors Yorkshire County Cricket ClubYorkshire County Cricket Club
Yorkshire County Cricket Club represents the historic county of Yorkshire as one of the 18 major county clubs which make up the English and Welsh domestic cricket structure....
and Bradford and Bingley Rugby Club (formerly Bingley Bees), and has previously been team sponsor of Bradford City A.F.C.
Bradford City A.F.C.
Bradford City Association Football Club is an English association football club based in Bradford, West Yorkshire, playing in League Two....
Valley Parade
Valley Parade
Valley Parade, also known as the Coral Windows Stadium through sponsorship rights, is an all-seater football stadium in Bradford, West Yorkshire, England. It was built in 1886, and was the home of Manningham Rugby Football Club until 1903, when they changed code from rugby football to association...
stadium had previously been known as Bradford & Bingley Stadium through sponsorship rights.
Trademarks
During the nationalisation process, it was revealed that the bank had registered more than 100 separate trademarks featuring the bowler hatBowler hat
The bowler hat, also known as a coke hat, derby , billycock or bombin, is a hard felt hat with a rounded crown originally created in 1849 for the English soldier and politician Edward Coke, the younger brother of the 2nd Earl of Leicester...
, its long-running logo
Logo
A logo is a graphic mark or emblem commonly used by commercial enterprises, organizations and even individuals to aid and promote instant public recognition...
. The bank had also purchased a bowler hat which had formerly belonged to Stan Laurel
Stan Laurel
Arthur Stanley "Stan" Jefferson , better known as Stan Laurel, was an English comic actor, writer and film director, famous as the first half of the comedy team Laurel and Hardy. His film acting career stretched between 1917 and 1951 and included a starring role in the Academy Award winning film...
in 1995, for £2000.
Ownership of the trademarks transferred to Santander with the licence to use the Bradford & Bingley name as part of the sale.