Hit by a sharp rise in funding costs during the credit crunch, Bradford & Bingley sold its savings business and branch network to Spain’s Banco Santander in 2008 while the British government took over its loan book.
“The UK authorities’ market-oriented solution has avoided any disproportionate distortions of competition while enabling the preservation of the viable parts of the business,” Competition Commissioner Neelie Kroes said in a statement.
The European Commission said the liquidation period would cover more than 10 years.
The Commission added the winding-down plan foresaw the extension of UK rescue measures already approved by the European Union executive and a potential capital injection.
Bradford & Bingley had specialised in risky self-certified mortgages, which the City watchdog the Financial Services Authority (FSA) has since banned, and also lent to buy-to-let property investors.