Bradford & Bingley, the bank bailed out by the taxpayer last year, has revealed it will not pay the interest due on £325m of subordinated bonds, raising questions over whether other Government-owned banks may do the same.

The bank, which revealed the plans in statements made after the market closed on Tuesday, said it would not make interest payments on £150m of floating rate subordinated notes due on 30 June, £125m of 6.625% notes due on 16 June, and £50m of 11.625% bonds due on 20 July.

A spokeswoman for B&B said that currently the deferrals were limited to those three payments. 'We haven’t taken any decisions on future payments, the board will consider it on a case by case basis,' she said.

Daily Telegraph