Troubled bank Bradford & Bingley looked set to be nationalised by the Government in a Northern Rock-style rescue package last night.
The Treasury was claimed by the BBC to be ready to take over the ailing company, allowing officials to sell it on almost instantly to another bank. If that fails, the 157-year-old business could be broken up and sold chunk by chunk to interested parties. Several big high-street banks, including HSBC, Barclays and Santander of Spain, were rumoured to have been approached.
Bradford & Bingley, hit by the sharp downturn in the mortgage market, insisted deposits were safe despite its decision to axe 370 jobs and its mortgage-brokering centre on Thursday. The move caused its share price to plummet and a rush of withdrawals, and its place as a high-street name is no longer guaranteed. The company's spokesman, Tony McGarahan, said the results of government negotiations would be announced to the stock market on Monday.
The announcement will kick off what is widely predicted to be one of the most depressing weeks in decades for Britain's high street with signs that the credit crunch is now sucking vast sums out of the country's major retail chains. To compound the problems, stores will tomorrow have to pay the £2.5bn bill for the year's final quarter of rent. Some may not be able to meet it.
In the past few days, blue-chip names such as Hardy Amies, MFI and JJB Sports, and lesser lights such as curtain chain Rosebys, have hit trouble. Hardy Amies admitted on Friday that it might have to go into administration, following a major shareholder's refusal to extend the tailoring firm a further lifeline; MFI, which has 200 stores, could go into receivership as early as tomorrow; JJB Sports has seen £120m wiped off its share value; and Rosebys, with more than 300 stores, went into administration on Friday.
Even retailers like John Lewis are finding it hard to shift stock as customers rein in their spending. Sales throughout its stores dropped by 5.6 per cent in the week ending 20 September, with furniture takings down by 22 per cent.
Marks & Spencer has been under pressure, too, and on Thursday the firm will release second-quarter trading figures that are not expected to be anything other than thoroughly downbeat. In July, the group announced a 5.3 per cent fall in UK like-for-like sales in the 13 weeks to 28 June – its worst quarter since April to June 2005. Its premium-end food business was hit hard by shoppers trading down to cheaper alternatives, with sales falling 4.5 per cent in the first quarter.
The firm has fought back with promotions such as its £10 meal for two with a bottle of wine and has even drafted in "Del Boy" Trotter actor David Jason to star in a new advertising campaign. But analyst Nick Bubb said: "Clothing sales have picked up in the first two weeks of September on the back of the autumnal weather, but that won't last and we still expect a very gloomy update and more downgrades."Reuse content