Coventry Building Society has signalled its interest in taking over Government-owned bank Northern Rock and remutualising the troubled lender.

A spokesperson for the financial mutual said it would 'not rule anything out' once the terms for the sale of the bank were known, adding that any decision would be made in its members' best interests.

The spokesperson said, 'The Government and UK Financial Investments [responsible for managing government owned financial assets] have yet to confirm the process and timetable for the sale of Northern Rock.

'When that decision is made the board will examine the criteria laid down and decide the next steps to take.'

Northern Rock was established as a building society in 1965, before demutualising and becoming a bank in 1997.

It was one of the worst-hit financial institutions during the credit crisis and the first requiring government intervention after its business model of raising capital on the international money markets and selling packages of mortgages to pay off the loans failed.