Staff at Northern Rock have won hefty Christmas bonuses and pay rises, despite their employer owing the Government nearly £30 billion.

Employees at the stricken lender have won a £200 bonus plus a windfall payment of 2 per cent of their salary, on top of a 4 per cent "cost of living" pay rise. The package will leave an average employee earning £20,000 better off by £1,200.

The settlement was agreed with the Unite union, which had warned Northern Rock that without its 6,000 staff there would be no business to rescue.

The package is being advanced to all employees up to the level of the company’s assistant directors, who earn £100,000 and will receive an extra £6,200.

In a letter from management, employees were told that the bonus recognised that "heavy demands have been placed upon our staff".

In September, Northern Rock branch staff found themselves facing tens of thousands of anxious account holders demanding their money in the first full-blown run on a British bank since the 1860s.

In a break with previous years, however, bonuses will not be linked to individual workers' peformances.

This morning The Times reported that Virgin Group's preferred-bidder status for Northern Rock will come under pressure today as JC Flowers begins a series of meetings with the beleaguered bank's board.

The American private equity group is hoping to gain preferred bidder status alongside or instead of Sir Richard Branson's company after submitting a revised proposal at the end of last week.

It is understood that Northern Rock and Adam Applegarth, its chief executive, received JC Flowers' fresh proposal on Friday, as well as a second revised proposal from Cerberus, another American investment firm.

Although JC Flowers' offer has been sanctioned as an "approved bid" by the Treasury, it is understood that the bank's board believes that it has not seen anything in the new offer that would make it change its allegiance. A source close to Northern Rock said: "They haven't seen anything yet to make them change their position ... they still think that Virgin is the preferred option."

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