The under-fire chief executive of beleaguered mortgage lender Northern Rock finally quit yesterday.

Adam Applegarth stepped down from the crisis-hit firm with immediate effect after 24 years.

Mr Applegarth, who intended to leave by next February, said: "It is time to hand over to management I'm confident will be part of the company's future. I wish them and the board every success."

Northern Rock was thrown into crisis in September when it was forced to seek an emergency bailout from the Bank of England after soaring borrowing costs in the credit crunch. The Newcastle-based lender is being propped up by an estimated £25 billion in taxpayers' money.

Mr Applegarth, who became chief executive in March 2001 at the age of 39, was paid £1.36 million, including a £660,000 bonus last year.

Although Northern Rock refused to comment on pay-off details, it said he will receive a settlement worth "substantially less" than if his contract was being ended under normal circumstances.

He will be paid in monthly instalments and the sum will be reduced if he gains a job with another company.

The married father-of-two will be replaced by Andy Kuipers, who joined the board in January 2005. Mr Kuipers stepped down as a director last month in a management overhaul but will oversee the strategic review of the company to finalise a rescue plan for the mortgage lender.

Meanwhile Northern Rock announced a £281 million writedown including a £118 million hit from structured investment vehicles (SIVs) and a further £32 million from its investment in more highly leveraged SIV-lites.

Northern Rock said it would still have more capital than the regulatory minimum. It gave no update on trading but said it had not changed its September forecast of an underlying 2007 profit before tax - excluding exceptionals and writedowns - of £500-540 million. That came amid growing doubts over the Olivant approach.

On Wednesday it was claimed Olivant - led by former Abbey chief executive Luqman Arnold - threatened to withdraw because it feels the bidding process is too long.

In an update on the rescue process underway since the bank's near-collapse, Northern Rock said it remained in "accelerated" discussions with a bidding consortium led by Virgin Group and was "engaged" with parties including Olivant.

It confirmed it expects to complete its strategic review by February.

Olivant is pressing for a decision before Christmas. Its proposal would keep Northern Rock as a going concern rather than a sale or break-up.

Virgin's plans are less favourable to investors as the team will pump £1.3 billion into the business in return for a 55 per cent majority stake, reducing the value of shares.

Financial institutions worldwide have been under pressure to write off chunks of their debt-related investments since August, when rising defaults against US sub-prime mortgages led banks to suspend all but the safest forms of lending, triggering a crisis of confidence in credit markets. Northern Rock was an early casualty, which left it unable to raise debt to service lending. The bank had relied on borrowing in the wholesale markets to fund about 75 per cent of its loans.