Following its nationalisation in February, Northern Rock has warned that it will find it difficult to repay the remaining £11.5bn outstanding on its £26.9 bn government loan due to the economic slowdown.

The bank has already repaid the government £15.4bn.

To achieve this, the bank has reduced its mortgage book, and is encouraging existing homeowning customers to redeem their loans and remortgage with other lenders, FT.com reports.

Ron Sandler, chairman, said: “The world has become more challenging and it will be harder to maintain the aggressive rate of redemptions.”