£612m For B+B savings arm

isofa

I jumped ship from Abbey long ago, due to their utterly appalling customer service, and the ability to get anything right with my or my family's accounts. But not for any other "are my savings safe" nonsense.

XXXX

Santander paid £612m to get their hands on £20b of savings, and is given £19b of state aid. Instant profit of £39b? Better than bargain!
http://news.bbc.co.uk/1/hi/business/7641193.stm

Why the Labour government could have given away tax payers money to Santander such way, is a mystery.

Wolf_Man

Maybe Mr Brown & Co. are off to sunny Spain for their next hols...

bristolleedsfan

isofa wrote: »

I jumped ship from Abbey long ago, due to their utterly appalling customer service, and the ability to get anything right with my or my family's accounts. But not for any other "are my savings safe" nonsense.

Lots on here have said the same thing. :T

MarkyMarkD

XXXX wrote: »

Santander paid £612m to get their hands on £20b of savings, and is given £19b of state aid. Instant profit of £39b? Better than bargain!
http://news.bbc.co.uk/1/hi/business/7641193.stm

Why the Labour government could have given away tax payers money to Santander such way, is a mystery.

You've completely misunderstood what's happened, that's the only mystery.

Once upon a time, Bradford & Bingley took in £20bn of savings. It had £20bn sitting in the vault, and a list of £20bn worth of savings account balances.*

Then it lent the £20bn to other people, mainly mortgage borrowers. So it had a load of mortgages worth around £20bn, and a list of £20bn worth of savings account balances.

Then the government forced B&B into default, by telling it to sell its savings account business to Santander. To do so, B&B needed to give Santander both the list of savings account balances and the £20bn of cash. Because B&B didn't have the £20bn of cash, it was in default and hence it got £19bn of cash from the FSCS (£14.6bn). The government gave it another £4.5bn, representing the savings account balances over the £35k FSCS limit. And, presumably, B&B threw in around £1bn of cash that B&B did actually have.

Santander ends up with £20bn of cash, and £20bn owing to savings account customers - net value £Nil. And they've paid £612m to acquire this, together with the branches (and, presumably, the liability for the redundancy costs should they, in due course, decide they don't need all the Abbey and A&L and B&B branches).

*Footnote: OK, this never really happened at one point in time. But it illustrates what happened over the course of B&B's entire history.

Milarky

MarkyMarkD wrote: »

Because B&B didn't have the £20bn of cash, it was in default and hence it got £19bn of cash from the FSCS (£14.6bn). The government gave it another £4.5bn, representing the savings account balances over the £35k FSCS limit.

You're not serious are you? I thought the FSCS was never to be used - yet in one hit it must be 'gone'. And since the FSCS is a 'promise' to pay and not cash-up-front I assume that Santander has not received any cash in fact - just an accounting slip for £14bn to write against those accounts.

scott_lithgows

isofa wrote: »

I jumped ship from Abbey long ago, due to their utterly appalling customer service, and the ability to get anything right with my or my family's accounts. But not for any other "are my savings safe" nonsense.

I shifted my current account from Abbey to B+B,still i,ve had 12 happy years away from them apart from them refusing to accept my Dad,s death certificate cos it was in Spanish :rolleyes: .

I ended up with them in the first place because they bought over National + Provincial now they are back like a bad smell.

I,m moving over soon to the Yorkshire BS,I wonder how long till my stalker follows me.

baby_boomer

XXXX wrote: »

Santander paid £612m to get their hands on £20b of savings, and is given £19b of state aid. Instant profit of £39b? Better than bargain!
http://news.bbc.co.uk/1/hi/business/7641193.stm

Why the Labour government could have given away tax payers money to Santander such way, is a mystery.

I can see why it is a good deal for Santander. They'll make loads of cost savings when they merger B&B with Abbey/A&L.

But when Bristol & West savings + branches were up for sale, most analysts estimated that it would go for 1%-2% of the savings balances. Santander is paying nearly 3%, so you can't say that the government has let this part of B&B go for less a going market rate.

The £19bn is to cover it against a run on the bank. There isn't likely to be a run on the bank and the government will get its money back.

There is not

£39bn instant profit

I'm sorry but you haven't understood the nature of the deal or the nature of banking business. The £20bn savings belongs to customers & the £19bn belongs to the government.

Amazing as it may seem in these times, it's actually the mortgage business which has made money for the banks in the past and it's mortgages which count as assets - not savings.

noh

Milarky wrote: »

You're not serious are you? I thought the FSCS was never to be used - yet in one hit it must be 'gone'. And since the FSCS is a 'promise' to pay and not cash-up-front I assume that Santander has not received any cash in fact - just an accounting slip for £14bn to write against those accounts.

Yes he is serious see paragraph 8 onwards of the treasury anouncement

http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2008/press_97_08.cfm

Yes the scheme would be gone in one hit except the payout by the FSCS has been financed by a short term loan from the BoE to be replaced by a Goverment loan.

Nigel

dunstonh

Milarky wrote: »

You're not serious are you? I thought the FSCS was never to be used - yet in one hit it must be 'gone'. And since the FSCS is a 'promise' to pay and not cash-up-front I assume that Santander has not received any cash in fact - just an accounting slip for £14bn to write against those accounts.

Tell me about it. IFAs have just been warned that we are almost certainly going to have to help fund the banking liabilities to the FSCS (as will other non banking related FSA authorised firms).