Northern Rock is expected to announce in the next 48 hours that it has agreed a framework with the Bank of England to give it more breathing space to hammer out a possible rescue deal, amid concerns that red tape is hampering efforts to sell the bank.

Advisers close to the negotiations said that decision-making until now had been slow and that any deal was unlikely to be completed this side of Christmas.

Agreement needs to be reached on the delicate transition from Bank of England funding to commercial bank funding before a deal with a private sector buyer can be hammered out.

Advisers hope that, if a trailblazing line of credit of up to £10 billion from Citigroup can be agreed, then other commercial banks may be persuaded to extend further loans.

Yet even agreeing the Citigroup loan requires a careful unpicking of some of the Bank of England’s £11 billion of emergency funding, and reallocating the collateral to Citigroup.

Hopes that a deal with Citigroup was drawing close sent Northern Rock’s shares soaring yesterday. They closed up 8.8 per cent at 172p.

However, there are still question marks over who is running the process.

Although government sources say that any deal is initially a matter for the Northern Rock board, sources say nothing can be done until the tripartite committee of officials from the Treasury, Bank of England and Financial Services Authority agree a framework.

With £11 billion of taxpayers’ money lent to Northern Rock so far, any deal will be fraught with complications.

One source familiar with the negotiations said: “No one’s been here before. It’s a hideously complicated situation. There’s going to be no simple solution.”

JC Flowers, the private equity group, is regarded as a leading contender to buy Rock, with potential interest also shown by other private equity groups Cerberus, Blackstone, Lone Star and Apollo. Contrary to one report, Apax Partners is understood to have no interest in bidding.

Another source said: “If you took any individual solution, any of them . . . are quite a long way to becoming concrete. Maybe Flowers will step up the pace, but so far [Northern Rock] haven’t heard back from any of them.”

A third adviser close to the talks confirmed that they were moving at a snail’s pace: “There is nothing done until all parties agree it is done. When you’re dealing with the Treasury, the Bank of England and the FSA, it is unpredictable.”

The tripartite committee, which is designed to coordinate Britain’s financial authorities in times of financial crisis, is already under fire for its handling of the Northern Rock crisis, the first serious run on a UK bank for 140 years.

The British Bankers’ Association added to the criticism yesterday, saying that the Bank of England might have prevented the crisis if it had loosened the rules on providing emergency liquidity two weeks earlier.

In a wide-ranging review of the Northern Rock panic and wider credit crunch, the BBA said that the Bank and FSA had exhibited failings and had a case to answer.

The criticism from bankers comes as Sir Callum McCarthy and Hector Sants, chairman and chief executive of the FSA, are due to be questioned today by MPs on the Treasury Select Committee.

Alistair Darling, the Chancellor, promised a statement this week setting out further proposals on reforms to give consumers confidence that their savings were safe.

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