The two hedge funds calling an emergency meeting of Northern Rock next Tuesday have urged the bank’s 180,000 shareholders to give their backing amid signs that the next three weeks will be critical to the stricken bank’s future. Financial Times, Daily Telegraph

SRM, the hedge fund run by Jon Wood, and RAB Capital, which between them own 18% of Northern Rock, have sent out letters to investors.

The meeting in Newcastle-upon-Tyne is expected to be a flashpoint for shareholder concerns about the crisis. It will give the hedge funds and some of Northern Rock’s 140,000 disgruntled private shareholders a highly visible platform to criticise the bank’s tardy sale process.

The Government has asked Goldman Sachs to deliver a report on options for Northern Rock by the end of this week so that it can make a decision about the future of the stricken bank by mid-January.

The move follows continued speculation that the two bidders for the bank – Virgin and former Abbey boss Luqman Arnold – are finding it very difficult to put together financing for their proposed deals. Goldman is scrutinising the possible funding package, which could be provided by Citigroup, Deutsche and Royal Bank of Scotland.

The many hurdles to an agreement by the three banks to lend up to £15bn to a bidder include the fact that the Treasury wants them to take some of Northern Rock’s lower quality mortgages as collateral so that the taxpayer does not end up owning the bank’s least attractive assets.