Rock fears deepen as the options dwindle

The delay in choosing which rescue plan to pursue now makes it almost certain that one of the two proposals will disappear, leaving just Sir Richard Branson's Virgin consortium in place with a bailout.

It also increases the chances of the Government having to nationalise the bank or even put it into administration because it cannot afford to pay back the £26 billion emergency loans it has had from the Bank of England.

Northern Rock shares today crashed 5.5p to 93.7p.

Olivant, the financial services group headed by former Abbey chief executive Luqman Arnold, had set Northern Rock a deadline of tomorrow for it to be officially named as an equal to Virgin, and given access to the same billions of pounds of backing from other banks.

Arnold also made it clear he wanted to parachute in his own management team immediately to stabilise the business, which continues to see savers' money pouring out and very little new mortgage business coming in.

Northern Rock today said it had "engaged" with Olivant, and claimed to have offered it every assistance. The Olivant rescue has the backing of Rock's largest shareholders, including hedge funds SRM and RAB which between them own more than 15% of the shares.

But Northern Rock today appeared to slam the door on any new management as it said that Adam Applegarth, the chief executive who spearheaded the high-risk borrowing policy that led to the first run on a bank in Britain for 140 years, is quitting immediately rather than in February as planned.

He will be replaced by Andy Kuipers, previously Rock's marketing director - and so largely responsible for its incredibly aggressive moves to build up share in the mortgage market in recent years.

Kuipers, 49, joined the board in January 2005, having worked for the former building society since 1987. He left it less than a month ago.

Rock chairman Bryan Sanderson today 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."

Applegarth, who has been at the bank for 24 years, said: "It is time to hand over to management who I'm confident will be part of the company's future."

Northern Rock said Applegarth's pay-off would be "substantially less" than the £750,000-plus that he was entitled to under his contract.

It has been suggested he will get about half that. However, Northern Rock added that the pay-off would be made in monthly payments rather than a lump sum.

The bank also revealed today that it will have to write down a total of £281 million on subprime-related loans and collateralised debt obligations.