Banks on rescue standby as B&B takes new tumble

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Amid wider market problems for financial stocks, the former building society best-known for the bowler-hat symbol used in the marketing, fell 3 ¼p to 25p. That leaves the company valued at just £361 million.

Financial authorities are said to be so nervous about the prospects for B&B that they have told three rival banks to get ready to execute a quick rescue deal.

Although there are no signs yet that B&B is going to the wall, rumours that it could be the next to face a "run on the bank" have circulated for months.

The Financial Services Authority has asked HSBC, Barclays and Spain's Santander — the owner of Abbey - to stand by.

According to the Daily Telegraph, the FSA has described the arrangement as "national service", an indication that none of them would do a deal to take B&B under normal circumstances.

They have been told that they will be called on to play "a role" - perhaps with B&B's portfolio carved up between the three of them.

Although officials are desperate to avoid another Northern Rock-style calamity, they don't want to use public money in the event that another UK bank gets into difficulty.

Bradford & Bingley is not a front-line player but it still has assets of £52 billion - plenty for even the strongest balance sheet to absorb.

The FSA was heavily involved in last week's shock deal that saw Lloyds TSB acquire HBOS.

B&B is the last of the former building societies that turned into banks to be still standing on its own two feet.

The bank insists that its funding is solid, and it remains well-capitalised.