PricewaterhouseCoopers will not face legal action for its audit of Northern Rock, the troubled bank's top brass has announced.

Earlier this year, Northern Rock commissioned a probe into PwC's audit of the bank and on the findings of KPMG Forensic decided not to drag the auditors through the courts on a negligence claim. There were insufficent grounds to take the former directors of the bank to court, Northern Rock added.

Northern Rock said in a statement to the City: 'A review of the conduct of the previous board in respect of funding and liquidity has been undertaken with the assistance of external advisors, Freshfields and KPMG Forensic.

The board has concluded that there are insufficient grounds to proceed with any legal action for negligence against the former directors, and has no intention of bringing any such action. The board has also completed a similar review in respect of the company's auditors and has determined that no action is warranted.'