Sept. 29 (Bloomberg) -- Bradford & Bingley Plc, Britain's biggest lender to landlords, may be taken over by another bank or nationalized today under a U.K. government-backed plan to protect 21 billion pounds ($39 billion) of customer deposits.

Chancellor of the Exchequer Alistair Darling will announce details of the plan before 8 a.m. today, his office said late yesterday. Treasury officials worked through the night on a partial government takeover, acquisition by a rival bank or a breakup and purchase of assets by several buyers.

``The government is stepping in,'' Yvette Cooper, chief secretary to the Treasury, said yesterday in an interview with the British Broadcasting Corp. ``Depositors and ordinary savers must be properly protected, and they will be as part of the arrangements we'll set out.''

Banco Santander SA, Spain's biggest bank, may purchase Bradford & Bingley's retail deposits, a person familiar with the situation said. The Santander, Spain-based bank is also likely to take on Bradford & Bingley's branch network, the person, who declined to be identified because the discussions aren't yet public, said late yesterday.

The branches and deposits belonging to about 2.5 million Bradford & Bingley customers would transfer to Santander's Abbey National unit in a deal worth in the region of 400 million pounds, Sky said, citing an unidentified spokesman for Santander.

Run Into Trouble

Bradford & Bingley is the third major British bank to run into trouble since credit markets seized up last year around the world. Its shares have fallen 93 percent this year. Northern Rock Plc was nationalized in February, and HBOS Plc sold itself to Lloyds TSB Group Plc on Sept. 18.

U.S. lawmakers yesterday said they made a breakthrough in talks on a $700 billion plan to buy assets from financial companies affected by a record number of home foreclosures, in an effort to revive credit markets.

Regulators in the U.S. seized Washington Mutual Inc., the country's biggest failed bank, and sold its assets and branches on Sept. 26 to New York-based JPMorgan Chase & Co.

Belgium, the Netherlands and Luxembourg will spend a combined 11.2 billion euros ($16.3 billion) to rescue Fortis, after investor confidence in the largest Belgian financial- services firm evaporated last week.

`Completely Failed'

Hypo Real Estate Holding AG, Germany's second-biggest commercial-property lender, said today it received a credit facility, following a report by the Financial Times Deutschland that the company may collapse.

Talk of another government-led bank bailout in Britain reopened a rift between the nation's political parties, with the Conservatives charging that Prime Minister Gordon Brown has held up regulatory reform and Labour ministers saying the opposition is playing politics.

``We've got a regulatory system set up by our prime minister that seems to have completely failed to spot that something was wrong, to get something done about it, and we've got a bunch of politicians running the country who've had a year to pass this legislation, which we've said repeatedly we will support,'' Conservative leader David Cameron told the BBC from his party's conference in Birmingham, England.

Brown and Darling worked through this weekend with the Bank of England and Financial Services Authority, negotiating an agreement with companies interested in buying parts of the bank based in Bingley, England. Possible buyers include Banco Santander, HSBC Holdings Plc and Barclays Plc.

Subprime Mortgages

Almost half of Bradford & Bingley's 42 billion pounds of loans in the first half of 2008 were to landlords, bringing its share of the U.K. buy-to-let market to 19 percent. About 17 percent of its loans go to customers who certify their own income on their application. They typically have a higher level of default than standard borrowers. Bad debts in the first half jumped to 74.6 million pounds from 5.3 million pounds last year.

The credit crunch that started after the collapse of the U.S. subprime mortgage market last year made it difficult for Bradford & Bingley to borrow and fund day-to-day operation.

Deposits at the bank amount to only slightly more than half of loans outstanding, which means it depends on capital markets for about half of its financing.

Brown has sought to capitalize on turmoil in financial markets by putting himself at the center of bank-rescue efforts. He flew to New York and Washington last week for discussions with hedge fund managers and President George W. Bush.

British Taxpayer

Yesterday, a poll showed the Conservatives' lead over Brown's Labour Party had been cut in half from a month ago before Labour's annual conference. A BPIX Ltd. survey gave the opposition a 12-point advantage over Labour, down from 23 points in August.

The Conservatives suggested they'll resist nationalization as the party had done when Northern Rock tapped authorities for cash a year ago.

``People will wonder why on earth the British taxpayer is being asked by Gordon Brown to bear the full risk,'' George Osborne, the Conservative spokesman on finance, told Sky News.

Cooper called the remarks ``completely incoherent and irresponsible'' and said Osborne doesn't seem to ``understand the nature of what's at risk.'' Vince Cable, treasury spokesman for the Liberal Democrats, told Sky that nationalization was the ``least worst option.''

The U.K. Shareholders Association, an organization that represents the interests of private shareholders, said it opposed nationalization of Bradford and Bingley. There may be better alternatives to protect the interests of all stakeholders, including shareholders, the organization said in an e-mailed statement late yesterday.

Bradford & Bingley has been hurt by the biggest drop in residential property in three decades. The bank's late mortgage rate is now about 2 percent of all loans, quadruple the U.K. average of 0.5 percent, according to the Council of Mortgage Lenders.

To contact the reporters on this story: Jon Menon in London at jmenon1@bloomberg.net; Poppy Trowbridge in London at ptrowbridge@bloomberg.net

Last Updated: September 28, 2008 22:16 EDT