The government, which has final say on a solution, has made it clear that nationalisation remains an option if private buyers fail to raise enough funds to immediately repay the more than $49.3bn that Northern Rock has borrowed in emergency loans from the Bank of England.

 

Shareholders' bid

 

The move came as Northern Rock shareholders failed to stop the bank's board from finding a private buyer as it tried to reach a rescue deal.

 

The bank's stakeholders, hedge funds SRM Global and RAB Capital, sought to restrict a possible sale, fearing that the board might succumb to political pressures, but fell short of the necessary votes.

A government takeover of Northern Rock means shareholders could be left with very little, or nothing, of their investment.

 

Alistair Darling, the finance minister, said on Tuesday that a private sale was the preferred option but did not rule out nationalisation.