A Northern Rock bank branch is photographed through a rain-covered lens in central London, Monday. Britain said it would consider requests for help from potential rescuers of Northern Rock, even though this could need approval from the European Union, as it emerged proposals put forward so far were pitched low. Northern Rock shares tumbled over 20 per cent to a new low on Monday after the bank said interest from potential suitors valued it at 'materially' below Friday's share price, and fell again Tuesday on reports that Cerebrus was no longer interested in bidding for the mortgage company. - Reuters

Shares in battered British mortgage lender Northern Rock PLC fell 38 per cent following a report that one potential bidder for the business dropped out of the running.

Northern Rock shares plunged to 65 pence (US$1.33) by midmorning, following a 20 per cent drop on Monday.

Earlier, The Times newspaper reported that Cerberus Capital Management LP, a U.S. private equity firm, has dropped plans to bid for Northern Rock. Cerberus had no immediate comment.

The Building Societies Association, meanwhile, reported that deposits at member institutions in Britain rose by a record £3.02 billion (US$6.2 billion) in October, on top of a gain of £2.81 billion (US$5.8 billion) in September.

Net comparison

That compared with a net gain of £772 million (US$1.6 billion) in October last year.

"It seems that the majority of these deposits are funds withdrawn from the Northern Rock bank," said Adrian Coles, director-general of the Building Societies Association.

The other bidders for Northern Rock include JC Flowers of the United States and Sir Richard Branson's Virgin Group.

Northern Rock is estimated to have borrowed about £25 billion from the Bank of England since it was forced to turn to it for funds in mid-September after being unable to raise finances in wholesale markets.

- AP