The Government officially nationalised the bulk of Bradford & Bingley this morning, seizing £50 billion of assets and bankrolling the deposit protection lifeboat to ensure the ordinary 2.6 million depositors will not lose out.

Banco Santander, the Spanish bank that owns Abbey National, has bought the £20 billion deposit business and the network of 200 branches.

Alistair Darling, the Chancellor, revealed that the immediate cost to taxpayers would be a £4 billion payment to Abbey and a £14 billion government loan to the Financial Services Compensation Scheme (FSCS), the permanent lifeboat scheme.

Branches would open normally this morning, the Chancellor said, but share trading in B&B has been suspended. It would be "business as usual" for the branches, call centres and internet operations of B&B, the Treasury said.

The remaining assets and liabilities of the former building society, including its £41 billion mortgage book, personal loan book, Yorkshire headquarters, treasury assets and wholesale liabilities will be taken into public ownership by the transfer of all shares to the Treasury, Mr Darling said.

The Government had acted immediately, on the advice of the Bank of England and the Financial Services Authority, "to maintain financial stability and protect depositors, while minimising the exposure to taxpayers," it said in a formal statement.

Shareholders and customers of other banks appear ultimately destined to pay for B&B's mistakes unless the stricken bank's assets prove sufficient to cover all liabilities during what is likely to be a lengthy wind-up process. The FSCS is normally financed by levies on all financial services companies.

Shareholders, including more than 800,000 small private investors, will initially receive nothing. It was not immediately clear what steps would be taken to consider compensation, if any.

The Financial Services Authority, which supervises British banks, concluded on Saturday that B&B no longer met threshold conditions for operating as a deposit taker, the Treasury said.

"Savers' money remains absolutely safe and secure," the Treasury said. "Borrowers should continue to make their payments in the normal way."

Banco Santander today declined to rule out job losses and branch closures in the wake of its £612 million purchase of B&B's savings business and branch network.

The owner of Abbey, having just acquired Alliance & Leicester and now the B&B branches, has overlapping branches in hundreds of UK high streets. Analysts said some of the 1,300 branches were bound to be closed eventually.

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