Bradford & Bingley nationalised

Stricken Bradford & Bingley today became the second British bank to be nationalised as the credit crunch continued to cut a swathe through the global economy.

Chancellor Alistair Darling confirmed the bailout after attempts to sell the business failed.

And today Prime Minster Gordon Brown said he would do "whatever it takes" to ensure the stability of the financial system in the wake of the move.

The Prime Minister said the Government had taken "decisive action" to protect depositors while safeguarding the interests of the taxpayer.

The agreement means taxpayers' money will be used to rescue yet another troubled mortgage lender, just months after Northern Rock was taken into public ownership.

The bank's £50 billion of loans - including £41.3 billion mortgage book, many of which are buy-to-let - will be taken over by the Government - leaving taxpayers to cover the cost of any defaults.

Its 200 branches and £22 billion in savings accounts will be sold for £612 million to Spanish banking giant Santander which owns Abbey and recently bought Alliance & Leicester.

The deal came as latest figures showed:

• Mortgage lending dived to just £143 million during August, only five per cent of the previous month's total.

• Homes are selling for a record discount as house prices continue to tumble.

• The number of people on waiting lists for affordable housing in rural areas has soared by more than a third in the past five years.

• Profits and business volumes among the UK's financial services firms are tumbling at a record rate, according to the CBI.

The Bradford & Bingley deal was thrashed out after a weekend of talks between the Treasury, the Bank of England and the Financial Services Authority.

Mr Darling said: "Letting Bradford & Bingley go down would have destabilised the entire system. We needed to take decisive action - that is what we have done."

But shadow chancellor George Osborne condemned the move as a levy on ordinary taxpayers to support and protect the investments of millionaire bankers who have been taking home seven-figure bonuses.

By Sunita Patel