New Star Asset Management’s lending banks will take control of the stricken UK fund manager early in the New Year after striking a deal under which they will swap most of the company’s debts for a 75% equity stake.

The accord between New Star, run by chairman John Duffield, and its banks, which are led by HBOS and also include Lloyds, Royal Bank of Scotland, HSBC and National Australia Bank, follows a turbulent few days for the fund manager, whose share price lost more than two-thirds of its value in early trading on Monday after it revealed its request for a suspension in trading in its shares was rejected by regulators.