LONDON (AFP) - Britain's Financial Services Authority (FSA) is in secret negotiations to facilitate the acquisition of mortgage lenderBradford & Bingley, the Sunday Telegraph reported.

According to the weekly, the regulator is talking to Spanish banking group Santander, which has already purchased two British banks -- Abbey in 2004 and the impending takeover of Alliance & Leicester -- as well as Dutch group ING and National Australia Bank, to gauge interest for Bradford & Bingley.

Unidentified sources described as close to Santander told the newspaper that it was unlikely the Spanish group would be interested in the troubled British mortgage lender, which has been hurt by the international credit crunch.

Bradford & Bingley said last month it had suffered net losses of 17.2 million pounds (21.8 million euros, 31.5 million dollars) in the first half of 2008, attributing the difficulties to "turbulence in the banking and housing sectors".

It revealed earlier in August that its shareholders had agreed to buy just under 28 percent of a rights issue aimed at raising 400 million pounds.

Last week, the global financial crisis led to what was effectively a rescue deal by giant British mortgage lender HBOS by banking group Lloyds TSB, as well as the collapse of Lehman Brothers, the fourth-biggest US investment bank.

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