Details of B&B rescue deal emerge

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The company, which has been battered by the credit crunch, is to become the second UK bank this year to be nationalised - following Northern Rock into public ownership - after attempts to sell the business failed.

Under the deal thrashed out in weekend-long talks between the B&B and the so-called Tripartite Authority - the Treasury, Financial Services Authority (FSA) and the Bank of England - the savings part of the bank's business will be sold to Santander.

This would see £22.2 billion worth of deposits, held by 2.5 million savers, taken into the ownership of the Spanish banking giant, which owns Abbey and will soon complete the purchase of Alliance & Leicester.

A Santander spokesman said: "The retail deposits and branch network will be taken over by Abbey. Details of which will be revealed later."

B&B's £41.3 billion mortgage book is set to be taken under public ownership - meaning the taxpayer takes on the risk of defaults.

A formal announcement on the fate of the buy-to-let specialist, which can trace its roots back to 1851, will be made later.

Treasury Chief Secretary Yvette Cooper has said that "ordinary savers" at the bank will be protected.

She said: "We have been very clear that the priority is to make sure that depositors, that ordinary savers will be properly protected, but also that we can support the stability of the banking system as a whole."

But its army of more than 900,000 shareholders from the former building society's demutualisation in 2000 could be wiped out - with the threat of job cuts among B&B's 3,000 staff.