Luqman Arnold, who helped to disentangle the fallout from the collapsed hedge fund Long Term Capital Management in the 1990s is assembling a rescue plan for Northern Rock. Sunday Telegraph, Financial Times, Daily Telegraph, The Times

Arnold, who tried to revive Abbey National as chief executive but instead sold it to Banco Santander, is working on a bid for Northern Rock, the mortgage lender, with Olivant, the investment firm, which would not involve a break-up or sale and would retain the group’s battered brand name.

He is thought to have won the support of several key Northern Rock shareholders. Bryan Sanderson, the new chairman, is also thought to view the proposals favourably.

The plan is believed to involve taking an equity stake of up to 20% and making Arnold interim chief executive, in place of Adam Applegarth.

The principle underlying the plan is that there is nothing fundamentally wrong with Northern Rock’s business, aside from the fact that the bank fell victim to a systemic liquidity crunch.

The plan is “all about restoring operational and financial confidence” in the business and is not believed to include any remuneration or fee for Arnold’s group. The group’s rewards would come from a recovery in Northern Rock’s share price.