B&B will split assets up to repay its loan

PART-nationalised bank Bradford &amp; Bingley (B&amp;B) will split up its &pound;50bn balance sheet into &ldquo;good&rdquo; and &ldquo;bad&rdquo; assets, in a move which mirrors the restructuring plans at Northern Rock. <br /><br />The group wants to sell off the &ldquo;good&rdquo; assets to private companies in a bid to repay its loans.<br /><br />Its mortgage book was nationalised last year, and it took on an &pound;18.4bn loan from the Financial Services Compensation Scheme (FSCS), while Spain&rsquo;s Santander took on its &pound;20bn book of deposits. <br /><br />B&amp;B has been told it must repay the loan as quickly as possible, and must also get used to functioning without government support.<br /><br />At present, the amount of working capital it receives from the state stands at &pound;8.5bn. The money is being clawed back as B&amp;B customers pay off their mortgages. <br /><br />But the bank is eager to repay as quickly as possible, which is why it is selling off some of the bank&rsquo;s books of business.<br /><br />B&amp;B is particularly struggling because it has one of the worst bad-debt ratios of the big banks. <br /><br />Its focus on buy-to-let lending has been a bone of contention, and so its management is keen to split off low-risk mortgages&nbsp; to be more attractive to a buyer, because of a low loan-to-value ratio.<br /><br />The bank also wants to reinvent its image as a business which could take on other banks&rsquo; work. <br /><br />It is becoming more focused on efficiencies which it will use to mange other banks&rsquo; books.<br /><br />The plan to split the bank into two is being considered by the European Commission (EC) and could be given the go-ahead next week as the EC holds its final session before the expiration of its five-year term. European Competition Commissioner Neelie Kroes may put restrictions in place on Northern Rock&rsquo;s capability to make new savings on the back of the government help it has had. <br /><br />Northern rock could also be split up into good and bad banks, selling off the good bits to a private buyer, such as Sir Richard Branson&rsquo;s Virgin group, supermarket giant Tesco, and some private equity houses.&nbsp; <br /><br />Virgin made its interest to buy into the bank known last week.<br />