The Phoenix consortium which hopes to buy Rover Cars from BMW has declined to comment on reports that British banks are blocking its rescue bid.

A report in The Guardian newspaper suggests that leading UK banks are frustrating the Phoenix bid by refusing to grant a £200m ($313m) overdraft.

The newspaper said Phoenix was in emergency talks with Canadian and US banks.

A BMW spokesman said on Wednesday that there had been no breakthrough in talks yet because Phoenix had to “first set out a satisfactory finance plan for its offer.”

The consortium, which includes a director of UK car bodies firm Mayflower, two Rover dealers and racing car group Lola, refused to discuss the financial details of its bid.

A rival bid from venture capital firm Alchemy fell through last week, when the firm walked out of negotiations with BMW. The two firms reportedly could not agree on who would pay for certain liabilities tied to the sale of Rover.

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Phoenix also poured cold water on a story by the Financial Times, which said UK Government aid could be blocked by European Union Competition Commissioner Mario Monti.

“The DTI (UK Department of Trade and Industry) said that no request for money had come from the consortium and I’m not disagreeing with that”, the Phoenix spokesman said.

Talks ‘positive’

After an initial meeting with BMW official on Tuesday, Phoenix boss John Towers said that the talks had been “detailed and positive”.

“It’s all gone very well for us. Things are moving in the right direction,” Mr Towers said.

The talks are likely to continue for at least another day, after the consortium spent the weekend examining Rover’s books.

BMW has set a deadline of the end of this month before it plans to shut down Rover’s car operations, with the loss of thousands of jobs in the West Midlands.

Meanwhile, the firm that withdrew from the talks on Friday signalled that it may be willing to re-open discussions.

The head of venture capital firm Alchemy, Jon Moulton, said the door was “still open” to further negotiations despite its decision to pull out of a deal.

However, a spokesman for the German carmaker told the BBC that BMW didn’t see any reason to resume talks with Alchemy.

The BBC’s industry correspondent Stephen Evans said Alchemy’s decision to walk away was seen by BMW as hard bargaining.

“The BMW board took a very dim view of that kind of brinkmanship and you get an impression that they don’t like this way of dealing,” he said.

Government blamed

Meanwhile, former Deputy Prime Minister Michael Heseltine has blamed the government for the crisis in the British car industry.

The Tory MP said the high value of the pound against the euro had led to BMW agreeing to dispose of its Rover subsidiary, and was threatening to lead to more redundancies at the Ford plant at Dagenham.

Mr Heseltine, an ardent pro-European, said the problem could be eased if Labour made an early decision to join the single European currency.