Thursday, July 3, 2008

Northern Rock written all over it – this is the beginning of the end for B&B

Bradford & Bingley rescued (again)

Leading City institutions have rallied round to provide £179m of vital equity following a last-minute decision by the US private-equity house, Texas Pacific Group, to walk away from the deal. TPG backed away from providing the new money after Moody's, the credit rating agency, decided it was downgrading the debt of Bradford & Bingley.

Posted by paul @ 11:49 PM (579 views)
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2 thoughts on “Northern Rock written all over it – this is the beginning of the end for B&B

  • Two down… so who next?

    Alliance & Leicester looks like the obvious target. It had a similar model to NR and B&B, growing rapidly on the back of dodgy mortgages. So far it has held up ok though.

    If we look across the Irish sea, Bank of Ireland has all the same problems. It is exposed not only to Ireland’s overheated property market, but also the UK through its Northern Ireland branches and its Bristol & West Mortgages subsidiary. It could be “too big to fail” in Ireland, but in the wider Euro-zone it’s definitely a tiddler.

    Other than that, the next victim could be a minnow like London Scottish Bank or it could be a minor building society. Neither of these would have much effect on the wider financial system though.

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  • crash bandicoot says:

    Whoever chose lending money to people who couldn’t really afford to repay it as a business model, are going to struggle over the comming months. It doesn’t sound like a proper plan in the cold light of day, so it shows just how much hype/hysteria there has been over the past couple of years.

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