Northern Rock's new CEO Andy Kuipers. - Reuters

LONDON, England (Reuters):

Northern Rock has taken a £281 million (US$574 million) hit to profit from its exposure to the credit crisis, the bank said yesterday, adding to its woes as it named a new chief executive.

The bank's volatile shares were down 15.3 per cent at 84 pence at 1550 GMT, valuing the company at just £354 million.

In a long-awaited update for investors, the battered lender said Andy Kuipers, a director who stood down from the board last month, would replace veteran Adam Applegarth, who left the company yesterday.

Applegarth announced last month he would step down but had not been expected to leave until next year.

Northern Rock, which was worth over £5 billion earlier in the year, is being auctioned off after it became Britain's highest-profile casualty of the credit crisis, but the process has been thrown into doubt in recent weeks, with at least two suitors withdrawing.

The bank yesterday faced the prospect of being left with only one bidder - its preferred suitor Virgin Group - after investment group Olivant said it had been rebuffed by the bank and indicated it was preparing to withdraw.

Olivant's proposal

It called for the timetable to speed up and to be given access to the financing banks involved, a source close to the matter said.

Olivant's proposal is backed by several leading Northern Rock shareholders, including hedge funds RAB Capital and SRM Capital, who together own more than 15 per cent in the lender.

Traders said the prospect of a single bidder and news of the hit from collateralised debt obligations and other structured debt investments had weighed on Northern Rock shares.

Northern Rock said the £281 million write-down included a £118 million hit from structured investment vehicles (SIVs) and a further £32 million from its investment in the more highly leveraged SIV-lites.

That compares with analysts' forecast for 2007 profit before tax and exceptional items of £467 million, according to Reuters estimates. The bank gave no update on its current trading, but said it had not changed its September forecast of an underlying 2007 profit before tax - excluding exceptionals and write-downs - of £500 million to £540 million.