Northern Rock chief leaves firm

Mr Applegarth announced in November that it was his intention to step down from his post at the troubled bank.

He replacement will be Andy Kuipers, who has been reappointed as a director despite stepping down from the bank's board last month.

Northern Rock also announced that it had taken a £281m hit from the turmoil in the credit markets.

Suitor threat

Northern Rock was plunged into crisis when the problems on the world's credit markets forced it to seek emergency funding from the Bank of England in September.

"I am confident that he [Andy Kuipers] is the right person to help manage the company through the strategic review process"
Bryan Sanderson, Northern Rock chairman
Northern Rock share price

The bank is now being kept going by an estimated £25bn loan from the Bank of England and it is seeking bidders to rescue it.

Northern Rock said talks with the Virgin consortium - which has been named as the preferred bidder - had continued "on an accelerated basis".

It also said that it had "engaged" with other parties, including Olivant, the group headed by former Abbey chief Luqman Arnold.

However, it emerged on Wednesday that Olivant is threatening to abandon its attempted rescue, having written to Northern Rock accusing it of frustrating its attempts to negotiate a large line of credit with Citigroup and Deutsche Bank.

Olivant also wants its team to take over the Rock's management with immediate effect, and it says that it will walk away from the deal unless its demands are met.

The Liberal Democrats have argued that Northern Rock should be nationalised temporarily, saying plans to sell the bank will not work.

Criticism

Commenting on the bank's new chief, Northern Rock chairman Bryan Sanderson said: "I am delighted that Andy has rejoined the board as chief executive.

"I am confident that he is the right person to help manage the company through the strategic review process."

In October, Northern Rock chairman Matt Ridley left the bank and was replaced by Mr Sanderson.

Both Mr Ridley and Mr Applegarth were strongly criticised by the House of Commons Treasury Select Committee in October over the bank's business model.

Northern Rock said that under the terms of Mr Applegarth's departure, he would be paid "substantially less than the amount which he would otherwise be due" under normal circumstances.

News of the £281m hit, and worries that Olivant could pull out of the bidding battle, pushed Northern Rock's shares down further. In lunchtime trade, the bank's shares were down 6.6p, or 6.7%, at 92.6p.