It has been confirmed that Bradford & Bingley (B&B) has become the second bank nationalised by the Government since the beginning of the credit crisis.

After much speculation, the UK mortgage lender was taken into public hands this morning (29 September 2008), and the savings and branch network was acquired by Spanish banking giant Santander in a deal worth £21 billion.

The firm got into financial difficulty as a result of a sharp increase in the cost of funds it borrowed from the global wholesale money markets, which were further intensified by its over-reliance on the buy-to-let market.

Chancellor Alistair Darling announced that the Government will take on the £41 billion of B&B’s mortgage and personal loan debts.

This morning, shares in the company were suspended, having fallen by 93 per cent this year.

Investors in the company will not be compensated, but the Government has assured deposit-holders that they will not suffer.

In a statement it said, ‘Branches will be open this morning as usual and internet, call centre, and all other transaction services will operate as normal.’

The move further exposes the UK taxpayer to the UK’s deteriorating housing market on top of the £100 billion already guaranteed via Northern Rock, which was taken into public ownership earlier this year.