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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Santandar Rebrands Bailed Out Banks, Bradford & Bingley, A&L

Companies / Credit Crisis Bailouts May 27, 2009 - 11:35 AM GMT

By: Nadeem_Walayat

Companies

Santandar has announced that it will rebrand banks that it took over in the midst of the financial collapse of the UK banking sector, namely Bradford and Bingley and Alliance and Leicester. Also to be rebranded is the Abbey which it took over some 5 years ago.


Some 1300 of the branches of the taken over banks will be rebranded under the Santandar brand, as a sign of trying to reassure customers of banks that teetered on the edge of bankruptcy that required government cash bailouts and sponsored takeovers to survive and have proved costly to the tax payer the price of which will be paid for after the next election in the form of higher taxes.

Santandar is a clear financial crisis winner as it effectively took over the best parts of the bankrupt banks such as A&L and especially Bradford and Bingley who's toxic mortgage book was nationalised in September 08. The price of reduction of competition will be felt by borrowers for perhaps decades as fees and charges continue to climb higher as the quality of service deteriorates as I recently pointed out with regards HBOS.

As I have written about over the past 2 years that the UK housing market crash would claim many of the smaller high street names as mortgage bank after mortgage bank would either go bust or be takenover, the first to go was Northern Rock, however not even I foreso the extent of the crisis some 2 years ago as even Britians largest Mortgage Bank, HBOS effectively went bust, requiring a shotgun wedding with Lloyds TSB which threatened to bring that 'safe' bank down with it, requiring government action to keep the new group afloat.

The banking sector has stabilised following the government's decision for the British tax payer to take on the liabilities of the whole banking sector by means of the bad assets insurance scheme which effectively means for a small fee the insolvent banks can dump their assets onto the taxpayers. This liability has grown to £1.4 trillion and is eventually destined to break above £2 trillion as the below graph illustrates a rise of total tax payer liabilities from £1.75 trillion at the end of 2007 to £3.9 trillion by the end of 2010.

As pointed out several times over the past 12 months following the Bank of England's initial £50 billion hand out to the soon to be Bankrupt banks in April 2008 that loan would in all likelihood never be repaid and mark the start of a series of hundred billion pound loans that would put Britain on the path towards a debt crisis that in the first instance would manifest itself in a sterling bear market whilst the Bank of England remained paralysed by the fear of inflation and failed to respond to the housing market crash of 2007-2009 until forced to do so in October 2008.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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