If ministers do decide to nationalise Bradford & Bingley, they face considerable practical, legal and political difficulties.

The political ramifications are explosive. However any potential nationalisation is structured, it is hard to see how taxpayers would not be left underwriting colossal liabilities.

Even if the business can be bought for a nominal sum, the Government will take on a big risk. B&B has loans outstanding of more than £40 billion and these are not ultra-safe, conventional loans to owner-occupiers. B&B several years ago decided to shift its strategy and go after higher-risk borrowers.

Its biggest customer segment are buy-to-let borrowers and their record in arrears and defaults is already growing very fast. Its second biggest customer segment is "self-certified" borrowers - who have not been required to provide any proof of income. Again the proportion of loans in arrears is growing fast.

Shareholders too may prove to be a challenge if nationalisation were to go ahead. It is only a month ago that they injected £400 million into B&B, paying 55p a share. They are likely to be furious if they are compulsorily bought out for less.

The Government is already facing a legal challenge from Northern Rock shareholders, who suspect they will be paid a nominal sum, if anything, when the independent arbitrator rules on what is suitable.

Any expropriation of B&B will also be a legal first. Under the Special Resolution Regime currently being pushed through parliament, the tripartite authorities - the Treasury, Bank of England and Financial Services Authority - will have much greater powers to seize banks, but the rules are not yet law.

Then there are the practical aspects of running B&B under public ownership. Tough decisions on jobs would have to be taken, assuming the business - like Northern Rock's - is to be slimmed down.

One possibility is that B&B could be merged with Northern Rock, but this would create even bigger integration headaches and potentially much larger job losses.

Private sector banks, already anxious that Northern Rock with Government backing has an unfair advantage over them, will be doubly anxious. European Commission competition regulators would also want to take a close look.

It may be that B&B can yet survive in the private sector. It has sufficient capital and liquidity to limp on for a while and if the US bank bail-out improves confidence in the money markets, it could yet rally. It may be that a private sector buyer can yet be persuaded to take over the business.

But if Alistair Darling does feel he has to press the button on B&B nationalisation, his troubles are only just beginning.

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