Adam Applegarth, the chief executive of Northern Rock, has quit "with immediate effect", parting company with the stricken mortgage bank almost two months earlier than expected.

The bank said it was replacing Mr Applegarth with Andy Kuipers, a 24-year veteran of the bank, "in order to hand over to management who have a future at the company".

It said: "Andy has very detailed knowledge of Northern Rock, having been at the company for 20 years. He has previously been responsible for sales, marketing, products, pricing and retention. He has recently been intimately involved in the strategic review process and so is very familiar with the situation.

"With Adam leaving Northern Rock, Andy is the best person to be CEO through this period."

Mr Applegarth, 46, worked at the Newcastle-based bank for 24 years. He was responsible for its disastrous strategy of ramping up its market share of mortgages and a reliance on the wholesale markets that ultimately forced it to borrow more than £25 billion in emergency funding from the Bank of England.

Mr Applegarth, who had already said he would be leaving the bank, was expected to stay on until the end of January. The 39-year-old executive will still receive a bonus this year, although the bank said it would be "substantially less" than he received last year.

He was paid £1.36 million last year, including a cash bonus of £660,000.

Mr Kuipers will take charge of the bank's strategic review, which the group said today will still be completed by next February. He will work with Bryan Sanderson, the chairman.

He arrives as the bank battles to keep rescue plans alive.

The Rock has already named Sir Richard Branson's Virgin Group as its preferred bidder, but was also being courted by Olivant, an investment firm run by Luqman Arnold, the former chief executive of Abbey National.

Olivant has threatened to drop its interest in Rock by the end of today unless it is granted to full access to the lending banks it needs to secure funding for its plans.

Mr Kuipers is understood to have been one of several Rock executives earmarked by Olivant to play a role in its recovery strategy. It is not clear whether Mr Arnold, who had hoped to be executive chairman, had intended to install Mr Kuipers as his own chief executive.

Northern Rock said it continued to pursue accelerated talks with Virgin but had also engaged with other parties, including Olivant. Previous private equity bidders JC Flowers and Cerberus have fallen away.

In an update on its credit markets exposure today, Northern Rock said it would take a £281 million impairment charge on its portfolio of highly structured investments known as collateralised debt obligations.

It also said it would take a £118 million loss on its exposure to £319 million of structured investment vehicles (SIVs).

Rock shares fell 4.6 per cent, down 4.6p at 94.6p.

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