Britain nationalizes Bradford & Bingley bank

By Steve Slater and Sumeet Desai

LONDON (Reuters) - Britain nationalized Bradford & Bingley on Monday, making the buy-to-let mortgage lender the second UK bank to be taken into public ownership this year as a deepening financial crisis claims victims around the world. After intense weekend talks failed to find an outright buyer for Britain's ninth-biggest mortgage lender, the Treasury said it would take over B&B's 50 billion pounds ($90.12 billion) mortgage portfolio and sell its deposits and branches to Spanish bank Santander.

"The stability of the system comes first," Prime Minister Gordon Brown told BBC Television. "We will work night and day to make sure that Britain can come through this downturn which started in America and it is now affecting the whole system."

The FTSE 100 index of leading shares fell 2.6 percent by 8:45 a.m. EDT on Monday, and is down nearly 12 percent this month on deepening worries about the UK banking sector. The pound fell more than 2 percent against the dollar.

The opposition Conservatives branded the move as another example of Brown's economic mismanagement but the Labour government in turn accused them of having no policies in place to tackle the market turmoil hitting the world.

"To pretend that somehow there was some other solution, unnamed, unspecified -- it seems to me to be clutching at straws. You needed to take decisive action. That's what we've done," said finance minister Alistair Darling.

The bank crisis has so far overshadowed the Conservatives' annual conference in Birmingham, central England, and recent opinion polls show Brown's jibe last week that it was no time for a novice to be in charge may be starting to stick.

After months of polls showing Labour on course for a humiliating defeat at the next election, due by mid-2010, four polls in the last week have shown a bounce for Brown, who was finance minister for a decade, as the market crisis worsened.

A Sunday Telegraph poll even put Brown and Darling ahead when people were asked who they trusted to run the economy after this month's government-brokered rescue of the country's biggest mortgage lender HBOS and laws curbing stock market speculation.