“August is always a funny month,” Adam Applegarth, the beleaguered chief of Northern Rock mused yesterday. “The last month seems like 15 years.”

His point was clear – the usual slowing of business over summer had made it impossible for management to gauge whether the halt on interbank lending, which began in the wake of the collapse of the US sub-prime mortgage market, would continue indefinitely.

Waiting to see whether the crisis would end with the summer months was agonising. The subsequent realisation that it would not signalled the end of Northern Rock’s way of doing business.

After a month of constant liaising with the City watchdog, Northern Rock approached the Bank of England for funding. Rounding off the message yesterday, Mr Applegarth declared: “This is a global phenomenon, not a Northern Rock phenomenon.”

However, yesterday he was struggling to sell that message. Questions were being asked, first about Northern Rock’s blind faith in its business model, which relied almost entirely on borrowing on wholesale money markets to fund home loans to customers.

Scrutiny has also fallen on the bank’s bullish approach, even as the cost of interbank borrowing was creeping higher.

In June, Northern Rock first surprised the market by issuing a profit warning, sending shares down 12 per cent. The bank blamed expectations of higher interest rates.

A month later, Northern Rock unveiled profits below expectations and admitted that rising interest rates would hamper profit growth next year as well, amid growing fears that they would hit house prices.

Despite it all, he unveiled a startlingly aggressive approach, vowing to seek yet more of the mortgage market after the bank had already increased its share from 8.7 per cent to 9.7 in the first half of the year.

Mr Applegarth acknowledged that the move would hit Northern Rock’s results this year and next year, but said that it would pay off in the following years: “You can expect arrears and losses to increase on credit cards and unsecured lending.

“We took a squeeze this year and next year in order to drive up earnings in 2009 and 2010.”

On August 26, with the summer in full swing and the money market in deep freeze, Northern Rock responded to speculation that it was about to issue another profits warning by refusing to rule out further increases in the cost of its mortgages.

For the past few weeks the bank has found it impossible to find willing creditors. It has been running on its minimal deposit accounts and some small sales in the US commercial paper market. Given the size of Northern Rock’s loan book, this was not sustainable.

Yesterday, time ran out for the company. The market is now waiting to see how long Mr Applegarth can last.

Bedrock

1965 Formed by merger of Northern Counties Permanent Building Society, established in 1850, and Rock Building Society, established in 1865

1997 Floats on the stock exchange after amalgamation with 50 other smaller societies. Pays windfalls of £2,255 to customers

2001 Adam Applegarth, 39, becomes chief executive

2002 Buys Legal & General’s mortgage business for £131 million

2002 Offers a mortgage allowing up to 120 per cent of a home’s value to be borrowed

At the centre of the storm

Executive directors

Directors’ bonuses were set at 95.6 per cent of salary for 2006

Matt Ridley chairman,

Age 49

Appointed April 2004

Joined 1994

Other positions author; nonexecutive, Northern Investors Company; nonexecutive, Northern 2 VCT; nonexecutive, PA Consulting

Pay £300,000 Shares 46,150

Adam Applegarth, chief executive

Age 45

Appointed March 2001

Joined 1983

Other positions nonexecutive at Persimmon

Pay £1.35 million Shares 98,257

David Baker, deputy chief executive

Age 54

Appointed September 2005

Joined 1996 (as executive director)

Other positions trustee, University of Newcastle upon Tyne Development Trust

Responsible for direction and management of operations

Pay £890,000 Shares 62,525

Dave Jones, group finance director

Age 48

Appointed February 2007

Responsible for finance, internal audit and compliance, group and credit risk management

Pay £890,000 Shares 25,988

Keith Currie treasury director

Age 50

Appointed January 2005

Reponsible for liquidity, wholesale funding, derivative portfolios, securitisation funding, covered bond programmes

Pay £714,000 Shares 43,746

Andy Kuipers commercial director

Age 49

Appointed January 2005

Responsible for coordination and direction of sales, marketing, products, pricing and retention

Pay £714,000 Shares 52,699

Nonexecutive directors

Sir Ian Gibson senior independent director

Age 60 Appointed September 2002

Other positions chairman, Trinity Mirror; deputy chairman, Wm Morrison; nonexecutive, GKN and Greggs; former member of the court of the Bank of England, 1999-2004

Pay £80,000 Shares 15,000

Adam Fenwick nonexecutive

Age 46

Appointed November 2003

Other positions managing director, Fenwick; nonexeutive, John Swire & Sons

Pay £54,000 Shares 3,750

Nichola Pease

Age 46

Appointed February 1999

Other positions chief executive, J O Hambro Capital Management

Pay £65,000 Shares 8,350

Michael Queen

Age 45

Appointed January 2005

Other positions director, 3i Group; nonexecutive director, Osprey

Pay £54,000 Shares 4,000

Rosemary Radcliffe Age 62

Appointed March 2005

Other positions chairman, Newcastle International Airport; member, Guernsey Financial Services Commission; former PWC partner

Pay £56,000 Shares 0

Sir Derek Wanless

Age 59

Appointed March 2000; former chief executive of National Westminster Bank

Other positions chairman, Northumbrian Water Group; vice-chairman, Statistics Commission

Pay £86,000 Shares 20,500

—Pay figures for 2006, shares as at February 27, 2007

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