Adam Applegarth, Northern Rock’s chief executive, is expected to leave the company with only half of his annual salary.

Talks between the bank’s board and Mr Applegarth, who announced his resignation last week, are continuing, but the chief executive is likely to depart at the end of January with about £380,000.

He is not expected to receive a bonus for the year, a contribution to his pension fund or severance pay.

Mr Applegarth’s basic pay this year was due to come to £760,000. Last year he received a bonus of £660,000. The 46-year-old last year had a pension pot worth £2.2 million, which would provide him with a £266,000-a-year income from age 60.

The bank declined to comment on the pay negotiations.

However, it did say that it had received “additional indicative expressions of interest covering a range of options for the business”.

In reference to an approach from JC Flowers, the US private equity firm that plans to offer a nominal sum for the company’s shares, Northern Rock said: “One [approach] . . . does contemplate an offer for the company materially below the market price”. The bank reminded shareholders that there was no certainty that the talks would lead to an offer for the company or even part of it.

Sir Richard Branson’s Virgin Group and a consortium led by Luqman Arnold, the former chief executive of Abbey, have also made approaches but neither plans to buy the whole bank.

Northern Rock was the FTSE 100’s biggest faller yesterday, dropping 12.6 per cent to 84p, as investors digested the disappointing news. It was the bank’s seventh successive daily fall, cutting its value to £360 million.

Shareholders continued to criticise the auction of the bank, which could lead to the company being broken apart. Philip Richards, chief executive of RAB Capital, the hedge fund manager with a 6 per cent stake in Northern Rock, said that the bank should be sold as a going concern.

The bank declined to name other potential bidders, but Apollo, the private equity firm, and ING, the Dutch bank, have been named in connection with offers.

Cerberus, the US private equity firm, is still thought to be interested in bidding for Northern Rock as part of a consortium. Yesterday GMAC, the General Motors financing business that Cerberus took a 51 per cent stake in last year, said that GMAC had submitted a “nonbinding indication of interest to buy a large nonUS mortgage lending institution”.

GMAC had been expected to play a part in funding a potential bid by Cerberus for Northern Rock. GMAC said yesterday that other parties were actively pursuing the same nonUS purchase but that if it won the bid, it would integrate its “local mortgage business with the acquired institution”. GMAC already owns Residential Capital, a mortgage lender.

GMAC took a $1.6 billion third-quarter loss earlier this month, after Residential Capital was hit by the fall-out from the US sub-prime mortgage crisis.

Yesterday it emerged that US motor sales and leasing were likely to be damaged as the same people who defaulted on their high-risk mortgages also stopped paying off car loans. GMAC is a big player in the American automotive financing market.

And these are the multibillion-pound questions for any would-be rescuers

How much might Northern Rock have to borrow from the Bank of England?
At its interim results on June 30, Northern Rock had assets of £113 billion, about £2 billion of which was shareholders’ funds. Banks usually have very few physical assets. Instead, products such as loans to customers are counted as assets. But these kind of assets also require funding; for every loan that Northern Rock makes, it must have the funding to support it. About £54 billion of the bank’s assets are securitised mortgages, on the back of which Northern Rock has sold long-term commercial paper. Analysts consider this paper to be a stable and secure method of funding a large part of the bank’s business.

In June Northern Rock had £30 billion in retail deposits, although this sum has been eroded by at least £2 billion and possibly much more by the run on the bank. At best, Northern Rock has £28 billion in deposits to support the remaining £57 billion of assets not covered by commercial paper. This leaves at least £29 billion in unfunded assets.

The Bank of England has so far lent Northern Rock about £24 billion, but this could rise to the full £29 billion or more, depending on whether customers continue to remove their deposits from the bank.

Did Northern Rock’s tough treatment of individual voluntary arrangements (IVAs) flatter its default figures?
IVAs allow a debtor to come to an agreement with creditors to pay off a percentage of their debts over a set period. Creditors accounting for at least 75 per cent of the total debt must agree to the IVA for it to go ahead. Northern Rock was well known for handing out the toughest treatment to IVAs in the banking sector, fighting almost every IVA application it received. The bank also had default rates on its mortgages that were better than average. Three-month default rates at Northern Rock were 0.47 per cent, about half the industry average. Its average loan-to-value ratio was a relatively conservative 59 per cent.

There has been speculation that Northern Rock’s aggressive response to IVAs had unfairly improved its default rates, but analysts believe that this is an unwarranted criticism for a number of reasons. Having made substantial losses on IVAs, most other banks have now tightened their terms, bringing the rest of the sector in lone with Northern Rock. Also, although IVAs are used on mortgage debts, they are more commonly associated with other types of debt, so are unlikely to have had a substantial impact on Northern Rock’s mortgage arrears.

What is the value of Northern Rock’s unsecured assets?
At its interim results on June 30, Northern Rock had unsecured assets worth £7.8 billion. These assets were mainly made up of unsecured personal loans sold to retail customers. The unsecured assets are unlikely to have a material impact on the current tortuous negotiations over Rock’s future.

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