Shares in New Star Asset Management, one of the UK’s best-known fund managers, plunged nearly 43 per cent on Monday as analysts warned it had just days to negotiate a deal with its banks to avoid potentially devastating outflows of its funds.

The FTSE-listed group announced before the market opened that it was in talks with HBOS, Lloyds TSB, HSBC and Royal Bank of Scotland, about a debt-for-equity swap that would leave the banks owning a majority stake in the ailing group.