Cattles has called a temporary halt to takeover talks with its rival sub-prime lender London Scottish Bank because it is not satisfied with LSB’s accounts.

Cattles, as it confirmed yesterday that it was negotiating to buy LSB, said that it was postponing the completion of due diligence pending a detailed review by KPMG, LSB’s auditors.

LSB played down the significance, issuing a statement that trading had been “broadly in line with our expectations”.

Its shares were resilient, sliding 1p to 116p, as it hinted at other potential bidders. It said that it was continuing to deal with “expressions of interest and proposals from various parties”.

Promethean, the private equity business chaired by Sir Peter Burt, who is also chairman of ITV, is understood to be one potential bidder.

Cattles said any offer for LSB would be subject to a review of the KPMG study and would be unlikely before January, when LSB publishes its results.

Cattles, which is being advised by Goldman Sachs, is attracted to LSB’s debt collection business Robinson Way and to its UK banking licence.

LSB said that it wished to end the uncertainty and extra cost as soon as possible.

The problem with the accounts has been exacerbated because LSB is presenting its figures for the first time this year under International Financial Reporting Standards.

Katrina Preston, of Bridge-well, said: “Our conversation with Cattles’ management suggests to us that it remains convinced by the strategic rationale of a potential deal, but it has been unable to get sufficient comfort on financials.”

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