LONDON - BRITISH mortgage lender Bradford & Bingley, which has been hit by a housing downturn and weakness in the wider economy, may be nationalised, newspapers reported on Saturday.

The Daily Telegraph and Daily Mail newspapers both reported, citing unnamed sources, that government ministers were considering a nationalisation of the troubled bank, little more than a year after the collapse of Northern Rock, which was eventually nationalised earlier this year.

A spokesman for the bank told the Telegraph, however, that it was 'fully funded and we are one of the strongest capitalised banks in the UK.'

'As far as the febrile speculation goes, we do not comment on market rumours.'

Bradford & Bingley announced on Thursday that it was cutting 370 jobs, mainly at its mortgage processing centre near London, in a bid to save 15 million pounds (S$42.9 million).

A newspaper report last weekend said that Britain's Financial Services Authority was in secret negotiations to facilitate the bank's acquisition.

Bradford & Bingley last month revealed net losses of 17.2 million pounds for the first half of 2008, attributing them to 'turbulence in the banking and housing sectors'.

It also said in August that its shareholders had agreed to buy just under 28 per cent of a new share issue aimed at raising 400 million pounds.

If it were nationalised, it would likely draw parallels to Northern Rock, which requested emergency funding from the Bank of England in September last year when it could not raise sufficient funds, and was taken into government care months later. -- AFP