London Briefing/Fiona Walsh:It is five months since the crisis at Northern Rock erupted into the first run on a British bank in more than a century and still there is no resolution in sight for the stricken lender.

If chancellor Alistair Darling harboured any lingering hopes of emerging triumphant from this messy business, they were dashed on Monday with the 11th-hour withdrawal of one of the three remaining bidders, the private equity group Olivant.

At stake is the £24 billion (€32.20 billion) of taxpayers' money that has been pumped into the Newcastle-based bank in recent months to keep it afloat - not to mention the reputation of Gordon Brown's government or the future of Rock's 6,000 employees.

The dramatic exit of Olivant, headed by the well-regarded former Abbey boss Luqman Arnold, has thrown the auction process - and the Treasury - into disarray.

Now there are only two bidders left - Sir Richard Branson's Virgin Group and a team made up of Northern Rock's new management. The prospect of nationalisation, which the government insists it will consider but in reality is desperate to avoid, looms large once again.

The controversial £30 billion government-backed bond proposed by the Treasury last month and which was widely criticised for being too generous, was designed to encourage more bidders to the table.

But the government's insistence that it be repaid within three years proved too much for Olivant, which could apparently make its sums work only if the terms were extended to five years. Quite why it took the private equity firm until within an hour of the deadline for bids to realise that fact is just one of the many mysteries of the Northern Rock debacle.

Hedge fund shareholder RAB Capital has come out in support of the proposals from the bank's in-house management team, while the government is said still to favour Sir Richard Branson. Under Branson's plans, £1.25 million of new equity would be injected into the bank, which would be merged with Virgin Money and would retain its stock market listing, although under the Virgin name.

The Virgin consortium would provide £500 million, Rock shareholders would be called on to raise the same amount via a rights issue and the remaining £250 million would come from Virgin Money.

Virgin would hold a 55 per cent stake in the bank, which is Britain's fifth-largest mortgage lender.

Proposals from the in-house management team, led by the former head of insurance group Resolution, Paul Thompson, also require shareholders to raise £500 million.

Under his proposals, Northern Rock would retain its name and would return to its roots with a low-risk strategy of funding mortgages by retail savings rather than from the money markets.

The business would shrink in size dramatically as a result.

The dilemma facing the government is that it wants a credible rescue plan that will secure the future of the bank but at the same time will ensure that the billions of taxpayers' money is repaid as swiftly as possible.

Having pumped so much money into the bank, the government also needs to be sure that Northern Rock's new owners succeed so well that it will be forced to defend itself against accusations of profiteering at taxpayers' expense a few years down the line.

Unwanted credit card customers

Meanwhile, the fallout from the credit crunch looks to be claiming some unexpected victims - credit card customers who pay off their balance each month.

Previously held up as paragons of financial probity, they have been caught up in a cull of high-risk customers by Britain's newly cautious banks.

Credit card firm Egg has sparked anger among consumer groups after writing to more than 160,000 of its customers informing them their cards would be withdrawn in 35 days. While Egg says it is targeting those whose credit profile has worsened, many who have had their cards cancelled say they have unblemished payment records.

But, just as banks do not like customers who default on their loans, they're not that keen on customers who repay their credit cards each month.

The Egg move looks to be part of a growing trend among banks to weed out unprofitable customers.

It follows Lloyds TSB's decision a year ago to impose a £35 annual charge on customers who did not use their cards. If there's no interest, there's no profit.

And that's why, even as it gives 160,000 of the wrong kind of customers the boot, Egg is still promoting a zero per cent offer on balance transfers for up to 15 months in an effort to win the sort of customers it likes.

Fiona Walsh writes for the Guardian newspaper in London