Last week was a dramatic one in the world of banking and finance. As was widely reported, the Bradford & Bingley has been part-nationalised, with its £50 billion mortgage and loan portfolio now under public ownership, while the branches and savings part of the business has been acquired by Abbey, part of the Santander group which also recently acquired Alliance & Leicester.

The collapse of Britain's last de-mutualised building society sees an end to one of the Thatcher-era's free-market cornerstones, although the demise of sub-prime specialist Bradford & Bingley merely reflects global consolidation in the industry, particularly among banks with high exposure to risky mortgage debts. In Iceland, the government has taken control of the country's third largest bank, Glitnir, while the Belgian, Dutch and Luxembourg governments have partly nationalised the Benelux banking giant Fortis. In America, the country's fourth-largest bank Wachovia was snapped up by Citigroup in a deal approved by the US authorities. In total last week, seven European governments were forced to either nationalise or indemnify deposits of large cross-border institutions.

The respective governments argue that by acting promptly, they are shoring up the banking industry and protecting public confidence, especially since the Bradford & Bingley takeover should avert potential losses for the taxpayer. According to the BBC's editor Robert Peston, the risk for the public purse was "quite close to nil". In the short term, the government has lent Abbey £19.1 billion to cover the value of all B&B savings accounts, although this will be reclaimed in full from the redemption and sale of the failed building society's large mortgage portfolio. The final nails in the B&B coffin came in recent weeks as savers withdrew their investments en masse, and other banks became reticent to lend to the stricken business, leading the government to step in on the advice of both the Bank of England and the Financial Services Authority.

At present, it is believed that Santander will keep its three trading names - Abbey, Alliance & Leicester and B&B - distinct, although realistically, any high street with more than one branch can expect to see consolidation, probably under a single brand. Santander has weathered the credit crunch remarkably well so far, with its 151 years of history resulting in over 60 million customers in 40 countries, and little in the way of toxic debt.