Banks and insurers on the hook for up to £14bn.
The Association of British Insurers has warned of a spike in premiums due to the onus on high street banks and insurers to pay for the Bradford and Bingley bailout, the Times has reported.
ABI boss Stephen Hadrill said: “Insurers are livid at the way that this has been handled. If it’s going to fall on the companies in due course, insurers are going to have to try to find that money from somewhere.”
Banks and insurers will have to pay up to £14bn into the Financial Services Compensation Scheme (FSCS) to cover any unexpected losses from the nationalisation of Bradford and Bingley.
The FSCS borrowed the £14bn from the government to underwrite B&B deposits transferred to Spanish bank Santander, which will by B&B’s £20bn deposit book and the 200-branch network.
The Times said that banks and building societies will be asked to ante up £900m a year just to cover the interest on the bill. That equates to more than £100m apiece for bigger players such as Royal Bank of Scotland.
It’s anticipated that banks and insurers will pass on the costs to consumers.