Top-level talks over Bradford & Bingley are continuing ahead of the Treasury announcement that the troubled mortgage bank is to be nationalised.

B&B is in discussions with the so-called Tripartite Authority - the Treasury, Financial Services Authority and the Bank of England - over the potential bail-out. In an attempt to try to avoid a rerun of the Northern Rock debacle the Government plans to hold an immediate fire sale to sell off B&B’s assets to one or more banks, and although the Treasury would only say that discussions were “ongoing”, an announcement will come later tonight or early tomorrow morning before the Stock Exchange opens.

Although the Financial Services Authority had been trying to find a single white-knight bidder to take over B&B’s loans in their entirety, Britain’s big banks refused to get involved. The Spanish banking giant Santander is in talks about its potential role in the rescue, with HSBC also possibly featuring.

Alistair Darling, the chancellor, had been keen to try to avoid an expensive takeover that would cost the taxpayer billions. It is understood that most of B&B’s £50 billion of loans, including £42 billion of home mortgages, will not be sold and will be nationalised on a long-term basis. Discussions are now understood to focus on breaking up the bank and selling its assets to other banks - the government has been lining up bidders for B&B’s £20 billion of retail deposits and 197 branches.

Tony McGarahan, a spokesman for B&B, said late last night that talks were taking place and an announcement would be made before the stock market opened tomorrow.

“We can assure customers that their deposits are safe with Bradford & Bingley,” he said.

Gordon Brown, who met President George Bush in Washington on Friday as the United States wrangled over its own economic crisis, returned to Britain yesterday to be briefed on the B&B situation by Mr Darling, who stayed in London to help oversee the latest blow to the banking system.

B&B has been hit hard by fears that its portfolio of buy-to-let and self-certified mortgages will generate huge losses as the credit crunch begins to bite and house prices fall.

The bank’s shares have fallen more than 93 per cent in the past year, closing a further six per cent down on Friday at just 20p. It is now valued at £290m, compared with £3.2 billion at its peak.

Talks have accelerated because of fears there could be a run on the bank tomorrow - B&B lost £800m of deposits in June and July.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive