The new management at Northern Rock, the mortgage bank nationalised in February, has launched an investigation to see if legal action should be brought against the former board.

Executive chairman Ron Sandler that he and the bank's lawyers wanted to know if action should be taken over the bank's failed strategy.

"I am not looking back trying to apportion blame... any correct board would look at the conduct of any previous board and seek to establish whether that previous board had discharged all of its duties," the paper quoted Mr Sandler as saying.

"I have initiated an investigation and that is ongoing. As and when it produces its results, I will know more about whether or not there is the basis of any action," he added.

Northern Rock, Britain's fifth-largest mortgage lender, was forced to seek emergency loans from the Bank of England in September after a funding crisis, prompting the first run on the deposits of a major UK bank for 140 years.

The crisis, which saw Northern Rock borrow 25 billion pounds from the Bank of England, prompted the government to nationalise the bank.