Wind-down plans for B&B and Dunfermline approved
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The European Commission has approved the measures taken by the government to wind down Bradford & Bingley and rescue Dunfermline Building Society under state aid rules.
The Commission says that these two decisions “close the chapter” of UK bank restructures bankrolled by government aid during the financial crisis.
After B&B was part-nationalised in September 2008, with the branch network and savings business sold to Spanish banking group Santander, the UK authorities put forward a liquidation plan for the bank.
The plan to liquidate the business states that the UK expects the rescue measures put in place for B&B to continue, and also outlines a potential capital injection.
The Commission has now authorised these measures, saying they are both appropriate and necessary to preserve confidence in the financial system.
Neelie Kroes, competition commissioner, says: “The B&B decision illustrates once again the positive contribution of European Union state aid policy to ensuring orderly and effective solutions to tackle the financial crisis.
“The UK authorities’ market-oriented solution has avoided any disproportionate distortions of competition while enabling the preservation of the viable parts of the business.”
B&B will relinquish or limit any regulatory permission that is not required for the orderly wind-down of the business.
The Commission says it will strictly monitor the progress of the wind-down process and its impact on competition.
The government’s rescue package for Dunfermline has also been rubber-stamped today by the European Commission.
Dunfermline’s retail and wholesale deposits, branches, head office and originated residential mortgages and social housing portfolio were transferred to Nationwide last March.
The remainder of Dunfermline’s business was placed in special administration and is being wound down over time.
The government has welcomed the Commission’s approval for both B&B and Dunfermline.
A statement from the Treasury says: “The government guarantee arrangements in relation to B&B, which were announced on September 29 2009, have been approved by the Commission as part of the restructuring plan and will remain in place until the wind down of B&B is complete.”
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