Alistair Darling is to put the initial burden of the deal on to the taxpayer - but it should soon shift to high street banks.
Further details have emerged of the government's takeover of Bradford & Bingley (B&B).
Earlier this week, the treasury announced that ownership of the beleaguered lender's £50 billion mortgage book would be passing into public hands, while financial services firm Santander had agreed to take on its branch network and its retail deposits.
Chancellor of the exchequer Alistair Darling has agreed for the taxpayer to bear the burden of the £14 billion needed to cover B&B through the Financial Services Compensation Scheme (FSCS) - which guarantees £35,000 of savings for each depositor. However, this liability will soon be transferred to high street banks, the Guardian reports.
For its part, the FSCS - which is funded by the banks - has just £5 million left from its levy last year. It has indicated that it will call on banks for an extra £450 million next September in order to meet the interest payments on Mr Darling's £14 billion B&B loan.
The situation is further complicated by Santander, who has received £4 billion from the chancellor in order to guarantee the deposits of those B&B customers not covered by the FSCS scheme.
Commenting on the nationalisation, Mr Darling said: "The first way of redeeming the costs that we are incurring comes from redeeming the assets of B&B. If that isn't enough, then there will be a claim under the compensation scheme."
The chancellor also indicated that it might be difficult for the government to wind down B&B's mortgage book by encouraging its customers to move elsewhere. "It does have more buy to let and self-certification mortgages - where, frankly, people just said what they earned and that figure was taken as fact - than we would like," he admitted.
