Shares in British bank Northern Rock fell more than 17 per cent early today on fresh concerns of a sharply discounted sale and amid negative sentiment across the financial sector.
The Sunday Telegraphreported that the UK Treasury had given two U.S. hedge funds - JC Flowers and Cerberus - permission to start takeover talks with the stricken lender, sparking fresh concerns over a firesale of its assets that would leave shareholders with virtually nothing.
Reports also revived talk Lloyds TSB could take on Northern Rock, but again at a sharp discount.
One trader said a Lloyds takeover would put Northern Rock in administration first, "which means that shareholders get diddly-nothing".
Northern Rock, which has been engulfed in crisis since being offered emergency financing from the Bank of England last month, said last week it had received approaches including a possible takeover offer - but said it had held no talks on price.
Northern Rock shares, down almost 90 per cent from the year's high, were trading at 152 pence at 0744 GMT, down 15.2 per cent, having touched a fresh record low of 144.5 pence.