Bradford & Bingley: Winners and losers

The nationalisation of Bradford & Bingley is good news for savers with the bank but will leave shareholders nursing heavy loses.

Here are some of the winners and losers from the move.

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Winners

* Savers

Bradford & Bingley holds £20bn of savings for customers who can be reassured that their money is safe. Spain's Santander, which has bought B&B's savings business, is a banking colossus with 60 million customers in more than 40 countries worldwide.

It remains to be seen if Santander will keep Bradford & Bingley's current savings rates or reduce them. B&B has frequently appeared on best buy tables recently as it tried to encourage depositors through its door. Santander is less reliant on this form of funding and as a result may reduce the rates, although commentators claim the acquisition should not significantly reduce competition in the savings market.

* Santander

Spanish bank Santander has acquired B&B's savings business and its branches, including 2.7 million customers, £20bn in deposits and nearly 200 branches, for £612m - which commentators are claiming is a bargain price.

The group already owns Abbey and Alliance & Leicester, so the deal will give it 1,286 branches and a 10 per cent share of the UK retail savings market.

* Taxpayers

Unlikely as it may seem, taxpayers are probably also winners from the move. Under the terms of the deal - which has seen the Government take on the group's £41bn loan book and guarantee around £9bn in other commitments - the Government argues that the risk to the taxpayer is minimal. The loans will be paid back by mortgage redemptions as B&B's lending business is wound down, and it claims the majority of the lender's loans would have to default for the taxpayer to lose out.

Losers

* Shareholders

Bradford & Bingley had 940,000 shareholders at the end of 2007, around a third of whom held 250 shares or less - a relic of the bank's demutualisation eight years ago. Shareholders are already sitting on huge losses after seeing the value of their holdings dive by 90 per cent since the beginning of the year to close at just 20p on Friday.

If today's nationalisation follows the Northern Rock precedent, the Government will pay independently-set compensation to shareholders, but the amounts will be small.

Shareholders are angry that they were not consulted about the decision. The UK Shareholders Association has declared its opposition to the nationalisation on the grounds that there may be better alternatives to protect the interests of all stakeholders

* Staff

Last week B&B announced 370 job cuts among its 3,000 staff and said more were set to be culled at its Bingley head office, which employs 1,400 people.

Under public ownership, more job cuts will loom as the business is shrunk rapidly - meaning employees face an uncertain future.

When Northern Rock was nationalised, its new bosses announced plans to slash staff numbers by a third in the next three years - leading to 1,300 redundancies in August.

Many staff are also shareholders through Save As You Earn schemes, meaning that they not only face the threat of losing their job, but could also have lost some of their savings.

* Mortgage customers

Mortgage customers are likely to be losers under the nationalisation. B&B's mortgage book has been taken over by the Government, and it plans to gradually run it down, meaning it has no incentive to hold on to customers. This means that new rates being offered to people coming to the end of a deal are likely to be highly uncompetitive in a bid to encourage people to take their business else where. In the short term, however, people will see no difference and should continue to repay their mortgage as usual.

* Buy-to-let landlords

B&B was a major player in the buy-to-let market. Its nationalisation and the subsequent running down of its mortgage book is likely to have a significant impact on the number of buy-to-let mortgages available, making it harder for investment landlords to secure the funding they need to buy properties or remortgage when their current deal ends.

It is also possible that with fewer players in the market, the remaining buy-to-let lenders will tighten their lending criteria in a bid to cherry pick the best customers.

* The banking sector

The Financial Services Compensation Scheme, which is funded by the financial services industry, has lent £14bn for the rescue package. Banks will pay the interest payments on the FSCS loan, with the first £450m instalment due next autumn.

The move to nationalise B&B is also likely to further knock confidence in the already beleaguered banking sector.

* The Government

The Government has taken B&B's £41 billion loan book on to the public balance sheet and guaranteed around £9bn in other commitments related to the bank, although it argues that the risk to taxpayers is minimal.

On the plus side, it can argue that it acted decisively and prevented a run on the bank similar to the one seen on Northern Rock.