IndyMac Bancorp became the biggest retail bank to fall victim to the US mortgage crisis on Friday, as regulators shut down the Californian savings back after the markets closed because it was unable to raise the cash needed to make good the almost $900 million of losses it has suffered in the worst housing crisis since the Great Depression.

The Federal Deposit Insurance Corporation, which regulates the bank, said it would take over the running of the group from when it will be called IndyMac Federal Bank.

IndyMac specialises in so-called Alt-A mortgages, relatively high-risk homeloans which don't require borrowers to prove their incomes. It suffered badly as its home state of California ranked second among the US states in terms of foreclosures, which accounted for one in every 192 households in June, nearly three times the national average.

The group's shares peaked at $50.11 on May 8, 2006. They lost 87 per cent of their value in 2007 and a further 95 per cent this year. On Friday they declined by a further $0.03 to $0.28.

The collapse of IndyMac, which was America's second-biggest independent mortgage bank with $32 billion of assets, is the second biggest bank to go under, after Continental Illinois National Bank & Trust - with $40 billion of assets - in 1984. Indy Mac, which was America's ninth biggest mortgage lender, when the main financial services groups are included, is the fifth US bank to fail this year.

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