FSA seen to facilitate B&B takeover

LONDON (Reuters) - The Financial Services authority has contacted three global banks to discuss a takeover of troubled buy-to-let lender Bradford & Bingley, the Sunday Telegraph reported.

Spain's Banco Santander, ING of the Netherlands, and National Australia Bank have all been approached by the FSA as it seeks to find a buyer for B&B, hit by rising funding costs in the wake of the credit crunch, the Telegraph said without citing sources.

The FSA declined to comment. A spokesperson for NAB-owned Yorkshire and Clydesdale banks also declined to comment, while Banco Santander and ING could not immediately be reached.

B&B said it is not involved in takeover talks.

"We're not aware of anything in connection with these three banks. Our funding foundations are solid, and we're well capitalised," a B&B spokesman said.

B&B has been hit by a jump in funding costs as the credit crunch pushed up the cost of wholesale borrowing, and is also facing rising debt arrears as the property market weakens.

In July, the bank raised 400 million pounds in an emergency rights issue that had to be overhauled twice, first after a profit warning, and then because of a credit rating downgrade.

On Wednesday, the government facilitated a takeover of HBOS, the biggest mortgage lender, by rival Lloyds TSB, by signalling that it would waive competition concerns over the deal.

HBOS, also reliant on wholesale markets for a proportion of its funding, had seen its shares fall steeply earlier in the week.

(Reporting by Myles Neligan; Editing by David Cowell)