Northern Rock’s chief executive resigned yesterday afternoon and declared himself “heartbroken”, as bids for the crisis-hit bank rolled in.

Adam Applegarth will stay at the Newcastle-based bank until the end of January, when he expects the company either to have settled on a buyer or secured funding to remain independent.

He told The Times that he had not yet discussed his severance pay with the board but that he expected to receive the “contractual minimum”. “It’s a lucky chief executive that chooses their time of going, but not many have to do it in the way I’m doing,” he said.

Mr Applegarth fell on his sword as Sir Richard Branson’s Virgin Group and a consortium led by Luqman Arnold, the former Abbey chief executive, submitted proposals for acquiring the bank. JC Flowers and Cerberus, the US private equity firms, are expected to confirm their interest over the weekend.

Northern Rock announced a strategic review after the credit crunch broke its funding model in mid-August and forced it to seek an emergency credit line from the Bank of England. So far it has borrowed more than £20 billion.

Mr Applegarth, who joined Northern Rock as a graduate, said yesterday: “Since the middle of August it’s been seven days a week, 20 hours a day, entirely focused on getting the company in shape and looking after stakeholders. I guess I’ll get to the end of my watch here and breathe a huge sigh.”

The 46-year-old yesterday said that he accepted responsibility for the bank’s troubles but continued to insist that the catastrophic changes in the credit markets were “unforeseen”.

Mr Applegarth said that he submitted his resignation months ago but that it was finally accepted by the bank’s board yesterday because the first phase of Northern Rock’s restructuring – flushing out bidders – was coming to an end.

He will leave after the second phase – a firm decision on the bank’s future – is completed at the end of January. The Chancellor has said that he will review the Bank’s loan facility in February.

Mr Applegarth’s departure was announced alongside a reshuffle of the board. Sir Derek Wanless, Nichola Pease, Adam Fenwick and Rosemary Radcliffe stepped down as nonexecutive directors. David Baker, Northern Rock’s deputy chief executive, Keith Currie, the bank’s treasury manager, and Andy Kuipers, its sales and marketing head, also stood down as directors. John Devaney, the chairman of National Air Traffic Services, and Simon Laffin, the former chief financial officer of Safeway, joined the board as nonexecutive directors.

Mr Applegarth said that he had agreed to stay for another two months at the board’s request because his “institutional memory” of the bank’s activities was vital to bidders’ due diligence.

Despite the potential suitors circling, he said that Northern Rock had not given up hope of refinancing the company so it can continue as a stand-alone entity. “I think there’s a good company in there struggling to get out,” he said.

Virgin said yesterday that it would appoint Sir Brian Pitman, the former chairman of Lloyds TSB, as chairman of Northern Rock if it won the bid battle. Virgin promised to repay a “significant proportion” of Northern Rock’s Bank loan immediately.

Mr Arnold’s consortium, called Olivant, said that it would repay the Bank loan “promptly” using “external market funding”.

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