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TOPICAL DEBATES Financial Stability

Let me make a little more progress, if I may. I talked about our response to the difficulties of HBOS, so let me move on to Bradford & Bingley. Purely private solutions to firm-specific problems are not always available, and there will be circumstances in which the Government need to take steps to deliver solutions with the private sector to ensure that depositors are protected and that banking services are not disrupted. Following a period of extreme market dislocation, Bradford & Bingley found itself in increasing difficulties as investors lost confidence in its continued independence. On 17 September, the FSA declared that Bradford & Bingley no longer met its threshold conditions as a deposit taker, and after consultation with the FSA and the Bank of England, and having explored all the options, we announced that Bradford & Bingley's UK and Isle of Man retail deposit business, along with its branch network, would be transferred to Abbey. The remainder of Bradford & Bingley's business was taken into public ownership through the transfer to the Treasury of the company's shares. That included its mortgage book, personal loan book, headquarters and relevant staff. The remainder of Bradford & Bingley's business will be run down over time—for example, as mortgages are repaid by its customers. The Treasury and the financial services compensation scheme will recover payments in the wind-down. The financial services compensation scheme paid out approximately £14 billion to enable retail deposits covered by the scheme to be transferred to Abbey. The Treasury has also made a payment to Abbey for retail deposit amounts not covered by the financial services compensation scheme—some £4 billion. We fully expect taxpayers to get the full £4 billion back.