Adam Applegarth today resigned as chief executive of Northern Rock, the Newcastle-based bank hit by the credit crisis.
He will remain with the group until it settles on a buyer or obtains funding to remain independent — a process due for completion no later than the end of January.
The bank also announced that Sir Derek Wanless, Nichola Pease, Adam Fenwick and Rosemary Radcliffe will step down from the board as non-executive directors.
In their stead, John Devaney, the chairman of National Air Traffic Services, and Simon Laffin, an adviser to CVC Capital Partners and a previous chief financial officer of Safeway, join Northern Rock as non-executive directors.
Mr Applegarth’s resignation follows the departure on October 19 of Matt Ridley, the bank’s chairman.
Bryan Sanderson, the new Northern Rock chairman, said in a statement: “Adam’s participation in the next phase of the strategic review is important, not least due to his extensive knowledge of the business and his ability to lead the process during this difficult period.”
Sir Ian Gibson, Northern Rock’s senior independent director, told the Treasury Select Committee last month that the bank’s board had offered him their resignations, should shareholders demand their departure.
News of Mr Applegarth’s exit came as Virgin Group issued a statement giving further details of its bid for the troubled bank.
Virgin said that Sir Brian Pitman, the former chairman of Lloyds TSB, would chair Northern Rock if it bought the bank. Virgin said that it intended to repay a “significant proportion” of Northern Rock’s loan from the Bank of England immediately.
The Virgin statement said: “A clear timeline is envisaged for full repayment of of the borrowings and the release of Her Majesty’s Treasury.”
Separately, Olivant, the fund founded by Abbey National’s former chief executive Luqman Arnold, said it is submitting a proposal to the Northern Rock Board offering an alternative to a distressed sale of the business.
Olivant is proposing to take a minority stake in Northern Rock. It said in a statement that it “entails taking urgent steps to re-establish Northern Rock as a viable business, retaining its brand and restoring it to financial health.”
The fund would only profit from any raise in the value of its holding, it added.
Chancellor Alistair Darling declined today to give clarity on the Government’s future funding plans for Northern Rock, despite the deadline for takeover bids closing tonight.
A spokesman at the Treasury, said this morning: “We don’t have an expectation of an announcement today.”
It had been hoped that Mr Darling would issue a statement on whether the Government is prepared for the taxpayer to pick up £2 billion interest charge on the £20 billion the Newcastle-based bank has so far borrowed from the Bank of England.
Mr Darling is due to return to the Treasury Select Committee in January to answer further questions over his handling of the Northern Rock crisis.
Bidders will today email their Northern Rock rescue proposals to Merrill Lynch, which is advising the mortgage lender on its sale, alongside Blackstone, the private equity house, and Citigroup, the investment bank.
Other potential new owners include Virgin Group, JC Flowers and Cerberus.
The Financial Times reported today that up to eight bidders, including banks in Europe and Asia, may make themselves known today or over the weekend
It also emerged today that traders have largely ignored a missive from the London Stock Exchange (LSE) this week to settle outstanding trades in Northern Rock and have now turned their attention to Alliance & Leicester.
Traders have sent Alliance & Leicester’s shares down 6.56 per cent to 605.5p — a near seven-year low. A&L shares were 600p on September 17, just after Northern Rock sought emergency funding and issued a profits warning.
Traders have been “shorting” Alliance & Leicester’s stock, meaning that they borrow the shares and sell them in the hope these can be bought back at a lower price.
One trader said today: “Most people are now switching their attention due to the fact the potential might be eroding in Northern Rock and looking to similar banks like Alliance & Leicester and Bradford & Bingley, thinking there may be short gains to be made.”
A spokesman at Alliance & Leicester, said: “We are not aware of any specific reason for our share price fall. We are continuing to successfully raise funds at around Libor.
“Standard & Poor’s reaffirmed our credit ratings on November 7. We have not raised any funds from the Bank of England, and our share buyback programme continues.”
Shares in Bradford & Bingley lost 4.75p to 285.75p in early trading. Northern Rock’s shares fell 2.1p to 132.6p.
