The European Commission has authorised, under EC Treaty state aid rules, the UK authorities' package of measures designed to ensure financial stability, protect retail depositors and support the orderly winding down of Bradford & Bingley. EC was in close contact with UK Authorities and decided over the measures within 24h. after the notification. UK authorities have committed to submit a restructuring and/or liquidation plan within six months, which will be examined by the Commission under its rules on restructuring aid.

The Commission's assessment of the aid measures found that the state funding to enable the sale of the deposit book provided a state aid to Bradford & Bingley and to its retail deposit business that was sold. The Commission also concluded that the working capital facility and the guarantee arrangements provided by HM Treasury to Bradford & Bingley constitute state aid.

On the other hand, the Commission found that the buyer of Bradford & Bingley's retail deposit business received no aid, as it paid the market price. In addition the Commission is not concerned by potential advantages that these measures may have procured to Bradford & Bingley's retail depositors, as aid to individuals is outside the scope of the EU state aid rules.

The measures described to solve Bradford & Bingley financial situation can be authorised as rescue aid is in line with the EU Guidelines on state aid for rescuing and restructuring or liquidating firms in difficulty. Under these rules, rescue aid must be given in the form of loans or guarantees lasting no more than six months, except when structural measures are urgently required, which was the case for Bradford & Bingley.

Moreover, the UK authorities have given a commitment to submit a restructuring plan for Bradford & Bingley to the Commission by 29 March 2009.

Bradford & Bingley situation and rescue measure

Bradford & Bingley (Public, LON:BB) is a UK-based financial institution, which provides specialist mortgages and savings products. As of December 31st, 2007, it had a balance-sheet total of £52 billion (approximately €65.7 billion). It operated 197 branches and 141 agencies spread across the UK and organised in four operational regions. Its market share of net new mortgage lending at the end of the 2007 was 7.7%.

By September 2008, the bank had fallen into difficulties and its licence to accept deposits was withdrawn by the UK Financial Services Authority. On September 29th 2008, following close cooperation with the Commission during the preceding days, the UK communicated the details of the measures taken and formally notified on  September 30th.

These measures include the nationalisation and winding down of the bank, the sale of Bradford & Bingley's retail deposit book and branches (the entire retail branch network has been taken by Spanish Banco de Santander) along with a matching cash element to Abbey National, the provision of a working capital facility and guarantee arrangements.