Monday morning news bulletin

Sep 29 2008 By Andrew Mernin

Struggling mortgage lender Bradford & Bingley is to be nationalised, the Government confirmed today.

But B&B’s savings and branch business - which has £20bn in deposits and 2.7m customers - will be bought for £612m by Santander, the Spanish bank which owns Abbey and has agreed to buy Alliance & Leicester.

B&B’s branches will remain open this morning as usual with call centres and internet banking also available, the Treasury said. Today's break-up will mark a dramatic end to a business which can trace its roots back more than 150 years.

The Financial Services Authority (FSA) decided on Saturday morning that B&B was not strong enough to continue as a deposit-taking business after the recent financial turmoil undermined confidence in the bank.

The FTSE 100 Index returned below the 5000 barrier today after the latest turmoil in financial markets caused another shares sell-off.

Banks were the biggest casualties after Bradford & Bingley was nationalised and Dutch-Belgium bank and insurer Fortis required a capital injection.

Asian markets had earlier set a downbeat tone despite the US financial bail-out, with the FTSE 100 Index ending the first hour of trading 144.9 points lower at 4943.5, a drop of 3%.

Royal Bank of Scotland was the biggest faller, down 10% or 21.5p at 186.4p, while Halifax Bank of Scotland slipped 12.2p to 161.1p.

Tour operators TUI Travel and Thomas Cook posted strong trading updates today as the pair showed signs of benefiting from the collapse of rival XL.

Thomas Cook described early indications for next summer as "encouraging" and said the reduction in capacity as a result of fewer operators in the sector had improved the company’s outlook.

Thomson owner TUI Travel told a similar story and said it had taken steps to eliminate unprofitable capacity.

Shares in Thomas Cook opened 4% higher, while TUI shares were unchanged.

The pound at 9am was US$1.8095 compared to US$1.8384 at the previous close, while the euro at 9am was £0.7925 compared to £0.7933 at the previous close.