Northern Rock charity cuts grants

The charitable arm of Northern Rock is planning to spend £7m in 2008 - less than half the total it spent in 2007.

Trustees of the Northern Rock Foundation said the "prudent" figure reflected the concerns about the future of the Tyneside-based bank.

The foundation has donated more than £190m to organisations in the North East Cumbria since 1997 and was given 5% of the bank's profits.

The Virgin Group has been named as the preferred bidder for the troubled bank.

'Fair and reasonable'

In a statement, trustees of the charity said organisations dealing with older people, those with mental health problems and disadvantaged young people, would be among those to benefit.

The statement went on: "The trustees have set this prudent working budget while negotiations about the future of Northern Rock plc continue.

"During 2008, the trustees will keep their priorities and budgets under review and will aim to make decisions about their longer-term plans once the negotiations on Northern Rock plc's future are resolved."

The foundation, which has a 15% stake in the bank, has urged shareholders to ensure any takeover offer for Northern Rock is "fair and reasonable".

Northern Rock got into financial difficulty in September and was forced to ask the Bank of England for emergency funding.