Northern Rock PLC's emergency funding from the Bank of England, the biggest bailout of a British lender in 30 years, prompted speculation that the company could be a takeover target.

The Newcastle mortgage lender said Friday that the central bank will provide an unspecified amount of credit. Rising credit costs had left the lender unable to make loans.

Northern Rock's shares plunged as much as 26%, to a six-year low.

"This is a set of circumstances that I've not seen in 25 years," Adam Applegarth, Northern Rock's chief executive, said on a conference call with journalists. "It's a substantial program. It is at a penalty rate. The facility will provide a solid ground base."

Jane Coffey, the head of equities at Royal London Asset Management, said that Northern Rock's troubles could lead to a buyout, and that the two most likely acquirers are Lloyds TSB Group PLC and HSBC Holdings PLC, which have strong balance sheets and already operate in the United Kingdom.

Spokespeople for Lloyds, HSBC, and Northern Rock would not discuss the matter Friday.

The bailout stoked concern among that other financial companies relying on short-term credit rather than deposits may be vulnerable, because borrowing rates exceed what they are making on loans.

Chancellor of the Exchequer Alistair Darling authorized the bailout, saying the Bank of England would step in as the lender of last resort "where institutions face short-term liquidity difficulties."

The assistance will "help Northern Rock to fund its operations during the current period of turbulence in financial markets," the Bank of England and the Treasury and Financial Services Authority said in a joint statement.

Also Friday, Northern Rock said it would report pretax earnings of $1 billion to $1.09 billion, missing the average analyst estimates of $1.3 billion. It blamed a "severe liquidity squeeze" and rising short-term interest rates and said it would no longer make unprofitable new loans.

Analysts for Royal Bank of Scotland Group PLC wrote in a note Friday that Northern Rock suffered from "a classic case of overtrading." Net lending surged 43% in the first eight months of the year, "faster than the bank's balance sheet could sustain."

Colin Morton, who helps manage $29 billion of assets, including Northern Rock shares, at Rensburg Sheppards PLC in Leeds said the bailout "leaves Northern Rock desperately hoping that something comes along" to restore investor confidence. "At the moment their funding costs are higher than what they get from people who are buying a house from them."

The bailout is the Bank of England's biggest step to help financial markets after credit costs soared last month amid commercial banks' reluctance to lend to one another.

By comparison, the European Central Bank has lent cash to banks in seven special auctions since Aug. 9, and the Federal Reserve Board has cut its discount interest rate and abandoned its bias toward fighting inflation.

At least 16 U.S. lenders have been forced into bankruptcy since investors shunned adjustable-rate and subprime mortgages.

Germany's Landesbank Sachsen Girozentrale and IKB Deutsche Industriebank AG are getting emergency bailouts after losses from asset-backed securities. Bear Stearns Cos., Goldman Sachs Group Inc., and Barclays PLC are among the companies that have stepped in to prop up investment funds in the past three months.

Northern Rock, which dates back to 1850, is the United Kingdom's third-biggest mortgage lender and had $35 billion of assets as of June 30.

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