LONDON, Sept 27 (Reuters) - Britain will nationalise troubled mortgage lender Bradford & Bingley, the BBC reported on Saturday, but the government said discussions on the bank's future were still going on.
It would be the second British bank to be nationalised this year after Britain, buffeted by the global financial crisis, was forced to take Northern Rock into public ownership in February.
The credit crunch, sparked by losses on poor-quality U.S. home loans, has claimed a growing number of high-profile banking victims around the world.
The BBC said the decision to nationalise Bradford & Bingley, using legislation put through to deal with the Northern Rock crisis, would be announced on Sunday evening or early Monday.
Bradford & Bingley's network of about 200 branches would be sold to one or more commercial banks, the BBC said.
The government said talks on B&B were still under way. "The discussions are still going on. A further statement is expected before markets open on Monday," a Treasury spokesman said.
B&B declined comment
B&B shares tumbled to a record low on Friday and the cost of insuring its debt jumped, prompting regulators to step up efforts to find potential white knights for the bank, hit by the credit crunch and Britain's sliding housing market.
The financial crisis and weakening economy have heaped pressure on British Prime Minister Gordon Brown, whose party lags the opposition Conservatives in opinion polls and whose leadership has been questioned by some in his own party.
His government had to broker a rescue takeover this month when the country's biggest mortgage lender, HBOS, looked as if it might become another credit crunch victim.
The Treasury, the Financial Services Authority and the Bank of England were locked in talks on Bradford & Bingley over the weekend, officials said.