The British government is nationalizing troubled mortgage lender Bradford & Bingley, the Treasury confirmed Monday, taking over the bank's 50 billion pound ($91 billion) mortgage and loan books. The move is intended to preserve the country's financial stability, Treasury Chief Alistair Darling said on BBC radio. "We are standing behind the system to stabilize it because to let Bradford & Bingley go down would have destabilized the entire system, especially given what's going on in the world at the moment," Darling said. The government has also paid out 18 billion pounds ($33 billion) to facilitate the sale of Bradford & Bingley's savings business, including its entire retail branch network to Spanish banking giant Banco Santander. The move comes hours after Dutch-Belgian banking giant Fortis NV was partially nationalized with a 11.2 billion euros ($16.4 billion) rescue from the governments of Belgium, the Netherlands and Luxembourg, after investor confidence in the bank disappeared last week. Germany's second-biggests commericial property lender, Hypo Real Estate Holding AG, said Monday it had secured a multibillion euro line of credit from several banks, as the financial turmoil in the United States spread further in Europe. The government is likely to take on the bank's toxic loans and fold them into Northern Rock, another mortgage lender nationalized by the British government in February, the BBC and other media has reported. Bradford & Bingley specializes in buy-to-let mortgages for rental properties, now considered one of the most volatile parts of Britain's troubled housing market. Falling property prices combined with rising mortgage rates mean that investors who took out loans to buy properties for rental are no longer able to cover their mortgages repayments with their rental income, and many are defaulting on the loans. Property prices across the country have fallen by around 10 percent in the last year, according to figures published by Halifax bank earlier this month. Bradford & Bingley said last week it was cutting 370 jobs in response to the worsening economy, but that was not enough to save the institution. The bank's shares have plunged from around 300 pence ($5.53) at the start of the year to 20 pence (32 US cents) Friday, amid fears that it is overexposed to Britain's falling housing market. All of the company's shares had been taken into public ownership by the time the markets opened on Monday morning, so trading is no longer continuing.
