Mumbai: Federal regulators have seized assets of US mortgage lender IndyMac Bancorp Inc, following a run on the bank by panicked depositors, in the third-largest bank collapse in US history.

IndyMac is the largest regulated thrift to fail and the second largest financial institution to close in US history, regulators said.

Federal regulators seized IndyMac Bank's assets on Friday after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures

California-based IndyMac, which specialised in mortgages that often required minimal documents from borrowers, became the fifth US bank to fail this year as a housing bust and credit crunch strain financial institutions.

The Office of Thrift Supervision announced a transfer of IndyMac's operations to the Federal Deposit Insurance Corporation (FDIC) as the lender failed to meet depositors' demands.

IndyMac customers were since allowed to take limited amounts of money via automated teller machines over the weekend, debit card transactions or checks, regulators said, adding other services, such as online banking and phone banking were scheduled to be made available on Monday.

The FDIC plans to reopen the bank as IndyMac Federal Bank, FSB.

IndyMac had total deposits of $19.06 billion as of 31 March. Deposits are insured up to $100,000 per depositor.

Customers with uninsured deposits could file a claim with the FDIC on Monday, the agency said.

Some 10,000 depositors had funds in excess of the insured limit, for a total of $1 billion in potentially uninsured funds, the FDIC said.

"This institution failed today due to a liquidity crisis," OTS director John Reich said.

IndyMac's failure came to light the day when financial markets plunged as investors tried to gauge whether the government would move to save mortgage giants Fannie Mae and Freddie Mac.

IndyMac Bancorp Inc, the holding company for IndyMac Bank, has been struggling to raise capital amidst the mortgage market slump.

Indy Mac has an estimated to be valued between $4 billion and $8 billion according to FDIC's cost estimates of an IndyMac takeover.

IndyMac's collapse is second only to that of Continental Illinois National Bank, which had nearly USD 40 billion in assets when it failed in 1984, according to the FDIC.

IndyMac had $32.01 billion in assets as of  31 March.