No legal action against Rock bosses

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Management said a review by lawyers and accountants into the previous regime, headed up by chief executive Adam Applegarth, had found "insufficient grounds to to proceed with any legal action for negligence".

Northern Rock also said it was "well ahead" of its Government loan repayment target, having paid back more than half the £26 billion owed to leave £11.4 billion outstanding as at September 30.

Before running into funding problems last summer, Northern Rock was one of the UK's biggest and most aggressive mortgage providers, advancing loans worth as much as 125% of home values.

It was forced to turn to the Bank of England for emergency support after the money markets froze, leaving the group facing a funding crisis.

Northern Rock's nationalisation in February led to 1,500 job losses as it scaled back activity to pay back the Government.

The lender has been reducing the size of its mortgage book in order to pay back its Government borrowing, and repaid £15.4 billion during the nine months to September 30.

But the group's mortgage arrears figure jumped by nearly 60% during the last three months, reflecting the fact that it has been left with poorer quality loans. The percentage of its estimated 600,000 mortgage accounts more than three months in arrears was 1.87% at September 30, up from 1.18% at the end of June.

Northern Rock also saw the number of properties in its possession jump 491 during the period to 4,201. Most of the repossessions were for properties secured with a "Together" mortgage, which allowed buyers to borrow up to 125% of the property's value.

Chairman Ron Sandler has warned that the bank, which racked up a near £600 million first-half loss to June 30, would be "significantly" loss-making this year.