Other banks losing ground included Barclays, down 8.8%.
Under the nationalisation of B&B, the government will take control of the bank's £50bn mortgages and loans, while B&B's £20bn savings unit and branches will be bought by Abbey and its Spanish parent group Santander.
Gordon Brown has pledged to do "whatever it takes"
All B&B savings accounts are protected, and taxpayers are being shielded from any losses thanks to the Financial Services Compensation Scheme.
Prime Minister Gordon Brown said the decision to act on B&B showed the government would "do whatever it takes to ensure the stability of the UK financial system".
"Following recent turbulence in global financial markets, Bradford & Bingley has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution," said the Treasury.
For taxpayers to lose a penny, Bradford & Bingley's future losses would have to be unthinkably huge
It added that the move would protect savers' money and that B&B's branches, call centres and internet operations would "be open for business as usual to provide continuity of service to customers".
BBC business editor Robert Peston said it was a good deal for taxpayers, and that the risk was "quite close to nil".
Shadow Chancellor George Osborne told the BBC that he would study the exact details of the deal, but that protecting taxpayers had to be the main priority.
Santander is paying £612m to buy B&B's savings business and 197 branches.
BRADFORD & BINGLEY
Founded in 1964
Switched from a building society to a bank in 2000
Employs 3,000 people
Based in West Yorkshire
Total of 197 branches
Abbey chief executive Antonio Horta-Osorio said the acquisition of B&B's bank's savings account was "good news" for customers.
"They can be certain that their hard-earned savings are with a bank they can trust."
To help facilitate Abbey's takeover of B&B's savings business and branches, it has been paid £14.6bn from the Financial Services Compensation Scheme - funded by the Bank of England - and a further £4.5bn from the Treasury.
This £19.1bn is to guarantee that Abbey could pay back all B&B savings account customers, if need be.
The government says it will get the money back - starting with the Treasury's £4.5bn - following the redemption and sale of B&B's mortgages, that are now in public hands.
A spokeswoman for Abbey said while it was "business as usual" for B&B's branches, it was too early to say whether any would close in the long term.
However, with Santander already owning both Abbey and Alliance & Leicester, it appears likely that there will be some branch closures.
B&B currently has about 3,000 staff.
B&B is the second UK bank to be nationalised since the start of the global credit turmoil, following Northern Rock's move into state ownership in February this year.
Bradford & Bingley's business is being split up
Speculation had intensified in recent weeks that B&B was approaching a funding crisis, leading to a growing number of customers withdrawing their funds.
B&B got itself into financial difficulty as a result of the credit crunch removing the option of raising funds through the global wholesale money markets.
Its problems were then further intensified by its focus on the buy-to-let market, which has seen a large rise in bad debts as UK house prices have fallen.
B&B has also struggled to fund a number of takeovers.
The announcement of its nationalisation comes two weeks after the news that HBOS is being bought by Lloyds TSB, and Nationwide's takeover of smaller building society rivals Derbyshire and Cheshire.
On the streets of Bingley, B&B's hometown, Janey Alvey, branch manager at Recruitment 2000, said they had received a number of CVs and calls or visits from about two dozen B&B workers concerned about their futures.
"They've not been told their jobs are under threat but it's not rocket science to know that things are not going to plan," said Ms Alvey.
Many residents in the town blame the activities on the stock market for the troubles at B&B.
"It's the ferrets and weasels on the stock exchange that are to blame," said one pensioner.
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