Mortgage lender Bradford & Bingley will be nationalised and its savings business sold to Spanish bank Santander, the British government confirmed this morning.
Shares in the mortgage lender were today suspended ahead of the announcement.
The Financial Services Authority's move came as markets awaited official confirmation of the Government's plans.
The lender's £41.3 billion mortgage book is set to be added to the national debt just months after Northern Rock was also taken into public ownership.
But B&B's savings and branch business - which has £22.2 billion in customer deposits - will be bought by Santander, the Spanish bank which owns Abbey and has agreed to buy Alliance & Leicester.