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UK lender Bradford & Bingley nationalized

  • Story Highlights
  • Santander to take over UK bank's retail deposit and branch network
  • British government take on bank's toxic loans
  • Santander said to be paying £600 million for B&B
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LONDON, England (CNN) -- Mortgage lender Bradford & Bingley confirmed Monday it is to become the second bank nationalized by the British government since the financial crisis began.

In a deal hammered out with Spanish bank Santander, B&B was being taken into public ownership after uncertainty over its future prompted savers to withdraw "tens of millions of pounds."

British Finance Minister Alistair Darling said B&B assets were sold to Santander's Abbey division for just over £600 million pounds, or about $1.1 billion.

"My priority was to protect savers and depositors, but also to ensure that we got a good deal for the taxpayer," Darling said.

"We had to stabilize the situation in order to protect the banking system as a whole."

B&B's mortgage assets will be held by the government for now, but sold in the future, Darling said, once the markets stabilize -- and hopefully at a profit.

B&B said it would be "business as usual" for its customers.

"Whatever channel they use -- branch, telephone, internet or ATM - they will all be open and operating as normal," the statement said.

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B&B's nationalization follows a similar government rescue of Northern Rock, which faced collapse earlier this year after it suffered heavily from exposure to the so-called credit crunch caused by bad debts.

The United States has seen a similar financial crisis.


In just the past month, the U.S. federal government has seized control of troubled mortgage finance firms Fannie Mae and Freddie Mac, Lehman Brothers filed for bankruptcy and Merrill Lynch was forced to sell itself to Bank of America.

Other failures or consolidations of financial companies are considered likely, according to analysts.

Copyright 2008 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.

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