The story
Formation
The Bradford & Bingley Building Society was the product of a merger between the Bradford Equitable Building Society (Bradford EBS) and the Bingley Building Society (Bingley BS) in 1964. There had been a move towards consolidation in the industry which had as many as 681 societies. In 1963 Bingley made the approach and the merger was effected with the understanding that there would be complete parity of control. Although Bingley BS had the larger number of branches (29 v 23) it was smaller by assets compared to the Bradford EBS (£43m v £56m). The Head Office was to be at Bingley; Bradford EBS had the President and Bingley BS the Vice President; and there were Joint Managing Directors. The new Society ranked number eight in the industry.
Sustained Growth
The period between the formation of the Bradford & Bingley Building Society and the conversion to a public company in 2000 saw sustained and substantial growth. Financial growth was aided by inflation, particularly in house prices, but the increase in members was from 164,000 in 1964 to 1.85m in 1988.
As well as organic development through the opening of new branches there were 24 acquisitions of other building societies between 1967 and 1987. The Hearts of Oak Society in 1982 was of particular benefit as it brought in 28 branches, mainly in the south-east. By 1988 the number of branches had increased from the 52 post-merger to around 250. Despite all this, the Society was still only number eight in the industry – a reflection of the amalgamations that were taking place elsewhere.
In May 1997 the society bought Mortgage Express from Lloyds TSB for £64 million.
In December 2000, following a vote by members, the society demutualised and floated on the London Stock Exchange.
2008 Financial Crisis
B&B had chosen to specialise in buy-to-let and self-certification mortgages – its strategy left it exposed to the subprime mortgage crisis.
In response to the 2008 financial crisis in June 2008 the company launched a £400 million rights issue. This 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.
Due to the effects of the credit crunch, in September 2008 the company's share price dropped to a record low. On 25 September 2008 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, including 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.
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Part nationalisation and sale of the savings book & branch network to Abbey National
There were reports from various sources that Bradford & Bingley was to be nationalised in its entirety, because a suitable buyer could not be found. With the structure already in place form the legislation involved in the nationalisation of the Northern Rock bank in February 2008 (see Banking (Special Provisions) Act 2008 and Nationalisation of Northern Rock, Bradford & Bingley was nationalised on 29 September 2008.
On 29 September 2008 it was also announced that the Spanish Santander Group under its Abbey National brand would acquire all of Bradford & Bingley's £20 billion (2.7 million customers) savings business and branch network. Santander paid £612 million, including the transfer of £208 million of capital relating to offshore companies. Bradford & Bingley's 197 retail branches, 141 agencies and related employees were transferred to Santander's subsidiary Abbey. The mortgage book, personal loan book, headquarters, treasury assets and its wholesale liabilities were taken into public ownership and closed to new business.In November 2008, the government set up a new company, UK Financial Investments (UKFI), to manage the shareholdings in Northern Rock and Bradford & Bingley.
Bradford & Bingley Shares
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.
Bradford & Bingley's shareholders were not reimbursed for their shares which the government had taken over. Over 300 shareholders complained to the UK Shareholders Association that they had not received information relating to the fate of their holdings. Peter Clokey of PricewaterhouseCoopers was appointed by the government in June 2009 to act as independent valuer of the business, and it was reported that shareholders would be told how much compensation they were entitled to by June 2010.
Clokey's assessment was published on 5 July 2010, finding that shareholders were not entitled to any compensation. The decision was appealed to the Upper Tribunal's Tax and Chancery Chamber where on 19 July 2012, Judge Sir Stephen Oliver recorded that the court was satisfied that the valuer had carried out his duties wholly in accordance with the compensation scheme.
Post Nationalisation
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 £42.2 billion 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.
On 11 January 2010, the combined business of Abbey and the Bradford & Bingley branch network was renamed Santander UK, and all branches were rebranded at a cost of £12 million. Alliance & Leicester was rebranded at the end of November 2010.
On 25 January 2010, the European Commission 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. The two businesses were merged under a single holding company, UK Asset Resolution, on 1 October 2010.
Transfer of ownership to Davidson Kempner and Hyalite Mortgages
On 29 October 2021, ownership of Bradford and Bingley was transferred from UK Asset Resolution to Davidson Kempner Capital Management, returning the company to private ownership.
On 23 October 2023, Bradford and Bingley, and Mortgage Express ceased to operate with all remaining accounts transferred to Hyalite Mortgages, a division of Topaz Finance Limited.
From Wikipedia’s article on Bradford & Bingley, shared under CC BY-SA 4.0.5