An investor group led by the former head of Abbey is preparing a proposal for the board of Northern Rock that would avoid a sale or breakup.
The news triggered an 11 per cent jump in the battered lender's shares.
Investor group Olivant said it would propose taking a minority stake in Northern Rock with ex-Abbey boss Luqman Arnold becoming chief executive.
The proposal, days ahead of a Friday deadline for bids, is not an offer for shares in Northern Rock, the group said.
Earlier this morning, Northern Rock's shares were up 10.8 per cent at 160.7p, giving it a market value of almost £680 million sterling. The shares have been in turmoil since the bank was forced to turn to the Bank of England for emergency funds two months ago.
Among other potential bidders for Northern Rock are Richard Branson's Virgin Group-led consortium and US buyout firm JC Flowers. Both have confirmed their interest.