B&B and Fortis both in crisis

Times Online ^ | September 28, 2008 | Iain Dey

[Parody]

BELGIUM’s Fortis is this weekend poised to become the first large continental bank to fall victim to the credit crunch, as the global chaos continues with Bradford & Bingley and American savings giant Wachovia both teetering on the brink.

The Belgian central bank and the country’s regulator are paving the way for a bailout of the huge banking and insurance group, which has a £540 billion balance sheet and a market value of £12 billion.

In Britain, the fate of Bradford & Bingley will be decided today. Fren-etic talks between the Bank of England, the Financial Services Authority and the government have been taking place this weekend to save the troubled mortgage bank.

Santander, the Spanish bank, is in negotiations to buy B&B, but it is insisting on a stringent set of conditions. The talks are being led by Anto-nio Horta-Osorio, chief executive of Santander’s UK bank, Abbey.

Another option being pursued by the government and the FSA is to carve up B&B. This would result in the sale of its £20 billion deposit business, its 197-strong branch network and its troubled mortgage book. These assets would be auctioned to the highest bidder.

But the government could still be left with the bulk of the £42 billion mortgage book, half of which is exposed to the buy-to-let market. One government adviser said: “What we have to do is find the best deal for the taxpayer.”

If no buyers come forward, B&B will be nationalised and broken up. However, while the fate of B&B offers a fascinating insight into the hardship faced by financial institutions, in terms of international significance the problems faced by Fortis are far more serious.

[Parody]

Remember, these are some of the same European fools who were laughing at our predicament here in the U.S.A. not so long ago...

He who laughs last is the one still standing.

[givemELL]

Glad you posted this. I read earlier today that the Brit PM Brown was or is here this weekend, meeting with the Bailout Principals to garner $100 billion for B and B. quick. Anybody know anything about this?

[johnnycap]

Remember, when the US Sneezes, the world catches Pneumonia. They laughed at us early in the year when our stock market went down 20%. Then theirs all went down 40%. Wait six months and watch what happens to banks outside the US.

[medscribe]

It’s not the Belgians or even the Brits we should worry about. If either UBS or Credit Suisse falter, then the entire world financial system is really really screwed.