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Call for inquiry into bank's nationalisation

Call for inquiry into bank's nationalisation

A campaign group comprised of ex-Bradford & Bingley shareholders is calling for a public inquiry into the government’s dismantling of the bank after the financial crash.

The Bradford & Bingley Action Group argues that an independent public inquiry into the reasons behind the Yorkshire-based bank’s nationalisation in late September 2008 is "long overdue" and that the government’s decision was "deeply flawed and made in haste".

David Blundell, chairman of the BBAG, said: "B&B employees, shareholders, the former owners and the once prosperous Bingley community still do not know why their company — a solvent, highly regarded bank based in the North of England — was destroyed in this way."

According to Mr Blundell, B&B was solvent and had a far stronger balance sheet than both Halifax Bank of Scotland, which was taken over by Lloyds Bank in January 2009, and the Royal Bank of Scotland — neither of which were nationalised in the same way.

B&B was nationalised by then-prime minister Gordon Brown after homeowners struggled to repay their mortgages in the aftermath of the financial crash and the subprime mortgage crisis.

The bank was split up — the lending arm, including the mortgage loan book, was passed into public ownership while its savings section and branch network were sold to the Santander Group — and investors’ shares were wiped when they were suspended on the London Stock Exchange.

There is thought to be about 1m shareholders, many of whom were savers when B&B was a building society and received shares when it converted to a bank, who have received nothing in compensation from the firm’s collapse.

The government appointed Peter Clokey from Pricewaterhouse Coopers in June 2009 to determine the level of compensation payable to B&B shareholders.

Mr Clokey, who valued the bank at the point of nationalisation, ruled that B&B would have fallen into administration without taxpayer help and that therefore the shares would be worthless.

But Mr Blundell and the BBAG said the valuation was set up to fail as the government demanded an "in administration" approach with no access to further funding from the taxpayer — a different method than for other UK banks which received rescue packages.

According to the BBAG, Mr Clokey has since said that if the government had opted for a different ‘term of reference’, the valuation may not have been nil for shareholders.

The group has sent numerous Freedom of Information requests and letters to various government departments and MPs, most of which, according to the group, have been met with "obfuscation and subterfuge".

Most recently, the BBAG wrote to prime minister Theresa May, Liberal Democrat leader Vince Cable, Labour leader Jeremy Corbyn, and the initial 10 candidates running in the Tory leadership campaign asking them to support a public inquiry into the handling of B&B.

Only MP for Tatton Esther McVey, who was ousted from the contest in the first round, offered support for the cause.