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Business News

UK praised for final banking bail-out plans

The European Commission today approved what it called the last two chapters in UK Government-funded bank bail-outs.

Brussels has authorised state financing for the split-up of the Dunfermline Building Society and for the "liquidation" of Bradford and Bingley.

Both plans were praised by EU Competition Commissioner Neelie Kroes for saving viable parts of both businesses without distorting competition in the sector.

The Government has poured more than £1.5 billion into Dunfermline for an "orderly break-up", said the Commission, which resulted in a successful auction of the part of the company containing "good assets and liabilities".

The "bad" part went into administration.

In Bradford and Bingley's case, the Government nationalised and wound down the bank while it was still solvent, selling its retail deposit book and branches to Abbey National.

The Commission's approval of the move, last October, was conditional on submission of a "liquidation or restructuring plan" of the specialist mortgage lender with nearly 200 branches across the UK.

The resulting liquidation plan, said the Commission today, "ensures an orderly winding down of Bradford and Bingley in a manner which maintains financial stability".