LONDON - The British government announced Monday the nationalisation of troubled lender Bradford & Bingley, the latest European victim of the fast-moving global financial crisis.
B&B's savings business -- its best asset with 20 billion pounds of savings and 2.7 million customers -- will be sold to Spanish bank Santander, while its mortgage book will be nationalised, the Treasury said.
Abbey National, the British bank owned by Santander, will pay 612 million pounds (773 million euros, 1.1 million dollars) in the deal.
"What you're seeing is the government taking quick, decisive action, we're standing behind the system to stabilise it because to let Bradford & Bingley go down would have destabilised the entire system," finance minister Alistair Darling told BBC radio. "The government has got to provide stability."
Bradford & Bingley is the second British bank to be nationalised this year, after Northern Rock in February.
The FTSE 100 stock market in London plunged 2.63 percent in early morning trade, falling to 4,954.11 points as investors digested the deal as well as a massive bailout of Wall Street in the United States.
Hours before the deal was confirmed, US lawmakers agreed on the details of an unprecedented 700 billion dollar bailout for struggling Wall Street banks in a bid to avert the worst financial crisis since the 1930s Great Depression.
The Belgian, Dutch and Luxembourg governments also mobilised to help troubled financial group Fortis on Sunday, agreeing to inject 11.2 billion euros (16 billion dollars), Belgian Prime Minister Yves Leterme said.
The Belgian government said Monday it was prepared to support Dexia, another high-street bank, after its shares nose-dived in early trading.
In another sign of the trouble facing European lenders, Denmark's Roskilde Bank said Monday it had been sold to Nordic bank Nordea and two regional Danish lenders, Arbejdernes Landsbank and Spar Nord Bank.
In Britain over the weekend, officials from the Treasury, the Financial Services Authority watchdog and the Bank of England met to try to secure the future of B&B, which has also suffered from a property market downturn.
Anto Horta-Oso, Abbey National's chief executive, said the deal was "good news" for B&B's savings customers, adding: "They can be certain that their hard-earned savings are with a bank they can trust."
Bradford & Bingley stock has slumped in recent weeks.
It had announced Thursday that it was cutting 370 jobs, mainly at its mortgage processing centre near London, in a bid to save 15 million pounds. The bank employs about 3,200 staff.
Last month, it revealed net losses of 17.2 million pounds for the first half of 2008, attributing them to "turbulence in the banking and housing sectors."
The collapse of B&B, which specialises in mortgages for investors buying homes in order to rent them out, came after HBOS was bought by rival Lloyds TSB earlier this month.
The move has been opposed by the main opposition Conservatives, whose finance spokesman George Osborne told BBC radio: "Our principle is clear -- you need to protect the taxpayer."
Darling, though, insisted that there was no alternative to the deal.
"It's very easy to say that somehow it could all have been sorted out differently," he told BBC radio.
"But to pretend that somehow there was some other solution, unnamed, unspecified, it seems to me to be clutching at straws.
"I'm very clear: you need to take decisive action and that's what we've done."
The front-page headline in the Guardian newspaper summed up the reaction of much of the British media: "Another day, another bailout".