The hedge funds that invested in Northern Rock are understood to be furious with the Bank of England for deciding today to allow banks to use mortgage-backed securities as security against up to £50bn (€63bn) of government loans, arguing that the move comes nine months too late.

Sources close to SRM and RAB Capital, the largest shareholders in Northern Rock, which was nationalised after a run on retail deposits in September, described the move as a "U-turn".