European Commission officials have rubber-stamped the break-up of Bradford & Bingley in 2008 amid reports that the bank could be merged with another nationalised failed lender, Northern Rock.

At the height of the banking crisis, B&B’s struggling mortgage business was nationalised and its branches and savings business sold to Spanish bank Santander for £612m.

The European Commission said its decision “is closing the chapter” on UK bank restructuring caused by the financial crisis.

It concluded that the ten-year plan to close down B&B “ensures an orderly winding-down in a manner which maintains financial stability.”

As the lender is no longer active apart from serving its existing customers, the Commission added that there was “a limited impact” on competition while asset sales could be speeded up when market conditions improve.

Competition commissioner Neelie Kroes said: “The UK authorities’ market-oriented solution has avoided any disproportionate distortions of competition while enabling the preservation of the viable parts of the business.”

According to reports, B&B is close to agreeing a deal with fellow nationalised lender Northern Rock which would see its loan book merged with Northern Rock Asset Management, the Newcastle-based lender’s ‘bad bank’.

The Commission approved restructuring plans for Royal Bank of Scotland and Lloyds Banking Group in November.

Both B&B and Northern Rock are chaired by Richard Pym, who joined B&B before the crisis which saw it split up and was appointed to the Rock’s bad bank late last year.

His appointment was seen by some as a signal that the two organisations would be combined after months of civil service preparations to merge the ‘toxic’ banks.

B&B’s remaining operations are at Crossflatts, where around 900 staff work.

The old building society head office in Main Street, Bingley, is up for sale with an asking price of £4m and faces an uncertain future.

According to B&B managing director Richard Banks, several potential buyers have shown an interest. The likely outcome of a sale would be the eventual demolition of the controversial building, possibly to make way for a supermarket.

Meanwhile, Santander is rebranding its three UK subsidiaries – B&B, Abbey National and Alliance & Leicester – to its own name and identity. The move saw the disappearance this week of the B&B name from the town it made famous.