Cenkos's £1.5 billion takeover of Close Brothers has been scuppered, with the 130-year-old bank blaming stock market turbulence for its decision to snub the stockbroker's offer.

The collapse of talks leaves Blackstone, the private equity firm, as the front-runner to acquire the bank.

Tata, the Indian conglomerate, and Orix, the Japanese financial group, are also in talks with Close Brothers.

The bank said yesterday that there was a danger that Cenkos and Landsbanki, Iceland's second-largest bank and its bid partner, would not be able to finance their £10.25-a-share offer after two days of wild gyrations in global financial markets.

A Close Brothers spokesman said: “We bent over backwards to give Cenkos the chance of substantiating their offer, [but] neither the equity nor the debt finance had been committed and they required at least five weeks to get this in place.”

The bank also complained that Cenkos had set oppressive conditions on the deal.

Cenkos insisted that its £10.25-a-share offer was fully funded and accused Close Brothers of “putting up obstacle after obstacle” against the deal.

Cenkos said: “Senior Close management have given the impression of willing to engage but have, in fact, adopted a policy of obstruction. Any suggestion that Cenkos blocked the deal is plain wrong.”

Sources close to Cenkos accused Close Brothers of demanding a break fee in excess of the 1 per cent set on most deals.

Cenkos and Landsbanki had hoped to break up the bank, with Cenkos taking the asset management and corporate finance businesses and Winterflood Securities, Close Brother's stockbroking unit, and Landsbanki taking the commercial lending operations.

The pair made a 950p-a-share indicative offer for Close Brothers last November but were rejected, with the bank thought to be looking for an offer close to £11 a share.

They improved their offer to £10.25 a share this month.

Blackstone has done due diligence but may face difficulties in raising sufficient finance for a bid.

The firm hopes to buy the whole bank, then sell Winterflood to Collins Stewart, the stockbroker.

Landsbanki has not ruled out a return to the bid battle.

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