BRADFORD & BINGLEY’S 2.6m customers were assured by the government that their deposits were “absolutely safe and secure” this morning.

Banco Santander, the Spanish bank that already owns Abbey and soon Alliance & Leicester, has bought B&B’s £20 billion savings business and its network of 200 branches. Customers were told it was ‘business as usual’ and their savings will continue to be covered by the Financial Services Compensation Scheme (FSCS), which guarantees up to £35,000 if a company goes bust.

However, it has emerged that B&B will have the same banking licence as Abbey (and its internet bank Cahoot) meaning it will be considered one company under the terms of the FSCS. B&B customers who also have savings with Abbey will therefore have just one £35,000 limit and are expected to continue to switch money above the threshold.

Kevin Mountford, head of savings at comparison firm Moneysupermarket, said: “We have seen an unprecedented amount of activity in the last couple of weeks and I don’t expect the B&B-Abbey deal to quell that. It’s all about the perception, rather than the reality, of risk at the moment.”

Q: I’m a B&B customer. What’s happened?

A: All of Bradford & Bingley's direct channels including its retail branches and its savings accounts have been transferred to Abbey. The rest of the business, including the mortgage operation and headquarters, has been taken into temporary public ownership by the government.

The government insisted it was ‘business as usual’ for all B&B customers and that all channels – branch, phone and internet – should be operating as normal. There are no plans to change the Bradford & Bingley brand.

Q: So are my savings safe?

A: Santander is one of the largest banking groups in the world with 70m customers and more branches globally than any other international bank. It has been relatively unscathed by the global financial crisis – so far – and retains an AA credit rating. It will now become one of the biggest players in the UK, with around 10 per cent of the savings market and 24m customers.

Q: But what if the worst came to the worst?

A: B&B deposits would be covered by Abbey's banking licence and would still be protected by the FSCS. This scheme provides compensation, up to £35,000, if a firm goes bust.

Q: I already have savings with Abbey, which means my total will be more than £35,000. What should I do?

A: If you have savings with B&B and Abbey or Cahoot, you will be covered for only the first £35,000. The picture is different for savers with Alliance & Leicester, which Abbey is also taking over. Unlike B&B, it will continue to hold its own deposits and therefore have its own licence – meaning someone with deposits at both brands will get £35,000 of protection for each.

Mountford said: “The risks of someone like Santander going under and calling on the FSCS are minimal, but it’s all to do with the individual’s perception of risk. If I had savings with both Abbey and B&B, I would leave my money where it was, but I can understand people being concerned.”

Q: Where should I go?

A: Northern Rock has been taking millions in recent weeks because it has a 100 per cent government guarantee, although it may soon be forced to stop taking deposits because of the terms of its own nationalisation.

B&B savers don’t get a full guarantee because only the mortgage book, and not the savings business, have been taken into public ownership.

Anglo Irish Bank, which offers a bond in the UK paying 7.05 per cent, and the Post Office (backed by Bank of Ireland), which has a cash Isa at 6.25 per cent, have also seen big inflows since the Irish government raised its own compensation limit to the equivalent of nearly £80,000 last week.

Q: I’ve only just taken out a fixed rate bond with B&B at 6.7 per cent. What can I do?

A: You cannot withdraw your cash without paying a penalty, but the government insists your money is secure where it is.

Q: If I stay with B&B what is likely to happen to my savings rates?

A: Martin Lewis of Moneysavingexpert, the financial website, says: “… Having bought B&B’s savings book, Abbey may decide it’s an easy source of funding and drop rates like a stone, which, as most accounts are variable rate, it’s allowed to do. Every B&B saver should be monitoring their rates regularly, at least once a month over the next six months. If your account starts paying less than 6 per cent, ditch and switch it.”

Q: What has happened to my mortgage with Bradford & Bingley?

A: Your mortgage remains in place on the terms agreed with the bank. You continue to owe the same amounts to Bradford & Bingley under your mortgage as you did before, and so you should continue to pay it in the usual way.

Q: I have accepted a mortgage offer from Bradford & Bingley, and I am due to complete on my house purchase shortly. What should I do?

A: Bradford & Bingley will honour all mortgage offers it has issued – even if you haven’t signed and returned your offer letter.

Q: I have an outstanding mortgage offer from Bradford & Bingley. Is it still valid?

A: Yes. If you have already received a mortgage offer from Bradford & Bingley, it remains valid.

Q: I have completed an application for a mortgage from Bradford & Bingley but have not yet received a response. What should I do?

A: Unfortunately, Bradford & Bingley is no longer offering new mortgages. If you have not received a response from Bradford & Bingley, then it is likely that no mortgage offer has been made. If you have received a mortgage offer from Bradford & Bingley, but have not accepted that offer, then Bradford & Bingley will no longer be able to offer you a mortgage

Q: I own shares in Bradford & Bingley. What has happened to them?

Shares have been suspended on the London Stock Exchange and can no longer be bought and sold. The value of your holding will emerge as the B&B business is wound down.

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