The surprise withdrawal came ahead of the deadline at close of business for bids for Northern Rock, six months after it sparked the first run on a British bank in more than a century by seeking emergency central bank help.

Minutes later Richard Branson's Virgin-led consortium formally submitted its much-touted plans and Northern Rock's own management board also announced its own restructuring plan.

Under the Virgin plans, the bank would be relaunched under the name Virgin Bank and would be provided a 1.25-billion-pound (S$3.5 billion) injection of fresh capital, including 500 million pounds generated through a rights issue priced at 25 pence per share.

'We have made a proposal that seeks to stabilise the company and rebuild it as a trusted and thriving institution under the Virgin brand with a long-term future,' said Brian Pitman, who would head the re-launched bank.

Under plans by the Northern Rock board, the former boss of insurer Resolution, Paul Thompson, would become head of the restructured bank and at least 500 million pounds in new equity would be pumped in.

'The Board believes the restructuring proposal, once implemented in full, will result in an independent, well-capitalized, low cost and significantly lower risk mortgage and savings bank,' it said in a statement.

But the biggest surprise of the day was Olivant's withdrawal.

'Olivant... has today decided not to submit a further proposal in relation to the stabilisation, recapitalisation and repositioning of Northern Rock plc,' it said in a statement.

'Despite working intensively, we have been unable to formulate a value creation proposal which meets our investment criteria whilst also respecting (the British government's) proposed financing terms and the interests of other stakeholders in the company,' added its chairman Luqman Arnold.

Olivant had been expected to try to raise up to 650 million pounds by issuing new shares in the bank, after which it would have paid 150 million pounds for a 15-percent stake.

Last month, Britain's Labour government unveiled plans to keep Northern Rock in the private sector but said it could still be nationalised, having lent the bank about 25 billion pounds in emergency funding to keep it afloat.

Britain's Treasury, the Financial Services Authority and Bank of England are together expected to decide on a preferred bidder by the end of February.

Northern Rock is now worth less than a tenth of what it was 12 months ago, when the company was valued at 5.3 billion pounds.

Its business model involved borrowing most of its cash for mortgage lending in the money markets. But the firm was caught out last August when banks, fearful of losses on US mortgage investments, stopped lending to one other, creating a credit crunch.

The crisis at Northern Rock, which is based in England's northeastern city of Newcastle, prompted worried customers to queue in their thousands to withdraw savings from branches across Britain, in turn affecting consumer confidence in the banking sector as a whole. -- AFP