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Troubled lender Northern Rock is still intending to pay its shareholders an improved dividend this year, reports suggest.

According to the Financial Times (FT) the bank confirmed last night that it was planning to proceed with a 14.2p a share payment to investors.

The paper claims that Northern Rock has taken legal advice on whether to pay out the £59 million dividend to shareholders, warning that upping its payment from the 10.9p a share made last year would attract criticism given the bank's recent problems.

Shares in Northern Rock have lost more than half their value since the lender revealed on September 14th that it had asked the Bank of England to loan it emergency cash in the wake of an ongoing credit squeeze.

The Treasury was subsequently forced to guarantee existing and renewed deposits held with Northern Rock after the move prompted the first run on a British bank in almost 140 years.

However it is understood that the Newcastle-based lender has until Friday to change its mind over the dividend payment, which was initially announced on July 25th – before its troubles began.

Meanwhile shares in Northern Rock have been fluctuating today, following weekend reports that the bank may struggle to find a buyer in the wake of its recent problems.

Despite the lender having insisted that its business has returned to normal, Northern Rock's future as an independent company is considered to be untenable after thousands of savers withdrew their money from the bank.

But analysts believe that negative publicity surrounding the firm could put off prospective buyers, while it is claimed that other banks and private equity firms could struggle to fund a takeover in light of the ongoing global credit crunch.

Rising default levels in the US sub-prime mortgage market have led financial institutions to become more wary about lending cash to one another, amid uncertainty about the extent to which they are exposed to bad debts in the sector.