Shares in British lender Northern Rock dived 42 percent early on Tuesday, triggering eight brief trading suspensions, as investors continued to desert the embattled bank after it said it had received low takeover bids. Northern Rock pared some of the loss later, but was on track for one of its biggest one day falls since it entered the FTSE on Oct. 1, 1997, according to Reuters data.
"It doesn't exist anymore. It is finished. It's all over," a trader said.
After it resumed trading, Northern Rock shares were down nearly 22 percent as investors continued to shun the stock. Northern Rock said on Monday offers for the bank were materially below its closing price on Friday.
The Newcastle-based bank is Britain's most prominent casualty of the global credit market turmoil, which has also weighed on other mortgage lenders, such as Alliance & Leicester and Bradford & Bingley.
The Times said U.S. private equity firm Cerberus had dropped plans to bid for Northern Rock, dealing another blow to the bank.
Britain's Treasury said on Monday it would be partial to bids that minimized government involvement in trying to save the bank, and potential buyers should not just assume that a loan agreement with the Bank of England would be available beyond a sale or when the credit line expired.
"No one knows which way it is going to go. No one knows whether it is going to be broken up, whether it is going to be privatized, whether it is going to be taken over," said Mark Priest, a trader at TradIndex.
"Uncertainties in these conditions are just going to make this stock worse and worse and worse. We also have UBS and Swiss Re in Switzerland going limit down today. This banking sector is walking on a knife edge."
Northern Rock shares were down 25.4 percent at 78 pence.
Elsewhere in the UK banking sector, Bradford & Bingley was up 4.4 percent after it said it had sold a portfolio of 2 billion pounds ($4.1 billion) of commercial property loans and would use the proceeds to increase group liquidity.
Earlier, it also announced the sale of its Housing Association loan book, which comprises 2.2 billion pounds of assets.
"The Bradford & Bingley issue is that they are selling a loan book which is a high quality book where they know they can get a good revenue stream. They sold that to keep liquidity going in a very high risk, uncertain market, so long-term that's negative," another trader said.