Darling bids to extend Rock loan

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Advisers to the Chancellor are said to be in talks with Brussels officials over ways to continue the Bank of England's emergency loan without breaking European Union rules on state aid.

Mr Darling may announce as early as this week that any successful bidder can keep the loans already made to stricken Northern Rock, thought to total around £25 billion.

It is believed the announcement will be made in a "statement of principles" set to be outlined by Mr Darling, which will put forward the Government's hopes for the future of Northern Rock.

The Treasury declined to comment on the reports, but confirmed the statement of principles would be announced "within days".

The Liberal Democrats earlier called on the Government to nationalise Northern Rock and demanded that Mr Darling appeared before the House of Commons on Monday to answer questions on the bank's position.

Northern Rock chief executive Adam Applegarth and a number of non-executive directors announced their resignation late on Friday as the informal deadline for bids passed.

Reports suggest as many as eight parties have expressed interest in Northern Rock, although so far only four have gone public with proposals.

They are New York-based private equity firm JC Flowers, Sir Richard Branson's Virgin Money, Cerberus, another US private equity firm, and Olivant, an investment group headed by former Abbey chief executive Luqman Arnold.

Mr Arnold's proposals to parachute a heavyweight management team in to turn around the business - a quicker move than a full-blown takeover - today received support from the Northern Rock Shareholders Action Group, which was "favourably impressed" by the plan. But the key hurdle for any proposals will be dealing with the huge Bank of England debt racked up by the company.