Shareholders of Northern Rock are planning to propose to Bryan Sanderson, chairman, that the embattled bank should halt its sale process and install a management team headed by Luqman Arnold. Financial Times, The Times.

SRM Global, a hedge fund run by former UBS trader Jon Wood, and other institutional shareholders will put forward their proposals to Sanderson this week.

The board of Northern Rock yesterday met to discuss the expected eight to 10 proposals – including one presented by Luqman Arnold’s Olivant Group – expected to be submitted for Northern Rock in the auction.

Northern Rock is set to face further embarrassment when it reveals that all the bids submitted on Friday and over the weekend value the stricken bank at less than its current stock market value.

In an attempt to hasten the sale, The Treasury is talking to Brussels about bypassing EU state aid rules by reclassifying the Bank of England’s emergency aid as 'restructuring aid'.

That would allow the Bank to provide indefinite funding to Northern Rock, making it easier for bidders grappling with how to refinance the business’s borrowings.