BRADFORD & BINGLEY 
By By Steve Slater and Sumeet Desai
It would be the second British bank to be nationalized 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 nationalize 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
The Treasury, the Financial Services Authority and the Bank of England were locked in talks on Bradford & Bingley over the weekend, officials said.
SANTANDER IN RUNNING
Spanish bank Santander
A banking source said the Spanish bank was talking to the government and regulators about possibly taking over Bradford & Bingley's deposits and branch network.
Santander had no comment.
Under that scenario, B&B's 40 billion pound ($73.53 billion) mortgage portfolio would be nationalized.
No major bank is keen to take on B&B's lending book at a time of weakening house prices, industry sources say.
Santander, which already owns Abbey, said in July it was buying another British lender, Alliance & Leicester, for 1.3 billion pounds.
Other possible buyers for B&B's branch network included HSBC
A person familiar with the talks said the government's preferred option was to find a private sector buyer for B&B.
"Within that Santander is the lead option on account that it has been interested before and knows the business. But it is not massively enthusiastic right now," the source said.
Another option might be to get a consortium to take over Bradford & Bingley, the source said.
Failing that, banks might still be interested in the best parts of B&B's business -- about 20 billion pounds worth -- and the government could take the rest, possibly merging them with already nationalized Northern Rock, the source said.
Another option was all-out nationalization followed by an immediate sale of good parts of the business, the source added.
Britain's top five banks -- HSBC, Royal Bank of Scotland
(Writing by Adrian Croft; Editing by Andrew Dobbie)
