Bradford & Bingley, the buy-to-let mortgage lender nationalised five weeks ago, has seen a rise in arrears in its mortgage book triggering fears the taxpayer could be exposed to potential losses.

B&B was taken into state control after the collapse of Lehman Brothers shook confidence in the global banking system. B&B’s branches and savings operations were transferred to Santander of Spain leaving the taxpayer with B&B’s £42bn mortgage loan book, which is expected to run down over time.