Engines giant Rolls Royce has disclosed it is in talks with the UK Serious Fraud Office in relation to concerns about bribery and corruption.

The firm said it was co-operating with the SFO after its own investigations identified matters of concern involving intermediaries in overseas markets.

The UK based company warned there was the potential for the prosecution of individuals and the company.

The probe follows a request for information from the SFO about claims of malpractice in Indonesia and China.

"Investigations by Rolls-Royce have identified matters of concern in these and in other overseas markets,' the company said in a statement.

''The consequence of these disclosures will be decided by the regulatory authorities. It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company. We will co-operate fully,'' it added.

Rolls-Royce said it has significantly strengthened its compliance procedures in recent years, including a new ethics code and an intermediaries policy.

The company is to appoint an independent senior figure who will lead a review of current procedures and report to the ethics committee of the board.

Chief executive John Rishton said: "I want to make it crystal clear that neither I nor the board will tolerate improper business conduct of any sort and will take all necessary action to ensure compliance. This is a company with exceptional prospects and I will not accept any behaviour that undermines its future success."