Three leading hedge funds are planning a break-up of beleaguered British bank Northern Rock , according to a newspaper report on Sunday.

The move could generate hundreds of millions of pounds in profits but would leave shareholders with virtually nothing, the Sunday Telegraph said.

The plan is to acquire the bank's mortgages at below face value and make a big profit by holding them until they mature. The proposed deal would see the funds divide up the mortgage book, worth more than 100 billion pounds ($200 billion),

The paper said Chris Flowers, the former Goldman Sachs banker who made a fortune from the rescue of Japan's Long Term Credit Bank in 2000, was among the group, along with the funds Cerberus and Citadel.

The funds, however, have yet to approach the Northern Rock board. A Northern Rock spokesman declined to comment.

Britain's fifth-largest mortgage lender has been seen as a likely takeover target after being engulfed by a funding and customer confidence crisis, triggering the worst run on a UK bank in living memory.

Rival banks, though, have been slow to show any interest on taking over the troubled business. The Sunday Times reported that at least a dozen of the biggest financial institutions in Britain and Europe had snubbed pleas from the authorities and Northern Bank's adviser Merrill Lynch to rescue it.

Northern Rock shares closed at 185.2 pence on Friday, valuing the business at around 960 million pounds ($1.93 billion), down more than 80 percent since the start of the year.