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Bradford & Bingley has ceased to lend as a result of its nationalisation and questions remain about the future of intermediary lender Mortgage Express, according to the Treasury. The Treasury confirmed as the savings business had been taken on by Santander, Bradford & Bingley no longer had any assets to lend against.

As a result the future looks bleak for Bradford & Bingley's intermediary arm Mortgage Express.

John Battersby, press officer for the Treasury, said Bradford & Bingley's mortgage assets had been taken under government control but would not be merged with Northern Rock at present.

However he said such a move could not be ruled out for the future.

He said: "There is no read across between Bradford & Bingley and Northern Rock as entities as things stand."

Mr Battersby said what was left of Bradford & Bingley would not be run on the same basis as Northern Rock.

He said: "We have not said they will continue to lend mortgages. What we have said is over time we will be running down the mortgage book and as people repay or remortgage elsewhere the overall value of the assets on the mortgage book will decline so that is what will happen rather than any new business being taken on."

Mr Battersby said any binding mortgage offers would be honoured but there was no obligation to honour anything that had not been agreed to.

The Treasury stated it was its understanding that all branch staff were under the care of Santander and staff at Bradford & Bingley's headquarters had their roles guaranteed for six months.

However Santander stated that it had not taken on any of the mortgage business or employees leaving question marks hanging over their future.

Nickie Aiken, group head of PR for Bradford & Bingley, said the now nationalised bank had been told it was business as usual and it was too early to say what would happen with the lending side of the business.

Northern Rock confirmed it had no involvement in the nationalisation and Gary Hoffman would still replace Ron Sandler as chief executive this week as planned, with Mr Sandler taking on a non-executive role.

Bradford & Bingley's nationalisation followed speculation the FSA was looking for a potential buyer.

Last week Bradford & Bingley revealed it was reducing its workforce by 370 in a bid to save £15m a year.

The lender said it was to close its Borehamwood mortgage processing site as well as get rid of 50 in-branch mortgage advisers and 20 intermediary supporting business development managers.

The lender also revealed last week it had renegotiated the terms of an agreement to purchase a minimum of £350m of UK mortgage assets for GMAC-RFC a quarter with £1.75bn remaining to be purchased before the end of 2009.

Both businesses agreed to revise the terms whereby £500m of loans would be acquired in the final quarter of 2008 and between £225m and £250m in the first three months of 2009, after which the agreement would cease.

When Mortgage Adviser contacted GMAC-RFC to ask if Bradford & Bingley had been taken under government control at an earlier date would have benefited them the lender declined to comment.

Melanie Bien, director for London-based adviser Savills Private Finance, said nationalisation could end intermediaries relationship with Bradford & Bingley.

She said: "If you look at Northern Rock it abandoned intermediaries with the tie-up with Lloyds TSB, encouraging customers to go to Lloyds rather than the intermediary that introduced them. It would be a shame because it has been such a strong intermediary brand."