Early this year the government announced that it was taking over the stricken bank Northern Rock, and passed legislation to allow the rapid nationalisation of the bank. The government has now used this same legislation to rush through the nationalisation of another struggling lender, the Bradford & Bingley. The government has announced that it is taking over the loan books of the bank, which stand at £50 billion, much of which has been lent to buy to let investors.

The savings account arm of Bradford & Bingley, said to be worth around £20 billion, is being bought by the high street bank Abbey, which is owned by the Spanish bank Santander. Officials have said that the money of savers is secure because of the guarantee offered by the Financial Services Compensation Scheme, and Abbey officials have said that the purchase of the savings account side of Bradford & Bingley is good news for customers, adding: “They can be certain that their hard-earned savings are with a bank they can trust.”

The Prime Minister, Gordon Brown, said that the decision that had been taken by the government in relation to the takeover of the troubled lender proved that the government was prepared to “do whatever it takes to ensure the stability of the UK financial system”.

The Treasury also released a statement, saying: “Following recent turbulence in global financial markets, Bradford & Bingley has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution.”

In the meantime the loss of confidence amongst investors saw the announcement followed by a crash in banking share prices. At close of trading following the confirmation of the takeover many major banks had seen their share values plummet.

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