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Fast forward to the present and the Newcastle-based lender announced it had made a statutory loss before tax of £167.6m in its 106-page annual results.

While the retail run on Northern Rock, its loans from the Bank of England and subsequent nationalisation of the bank have been well publicised, the results revealed pressure on the lender's margins first occurred in the first half of 2007.

The report, which can be found on Northern Rock's website, showed concerns about the lender's credit exposure in financial markets began to surface in the summer of 2007 alongside the rise in the cost of credit.

Despite liquidity restrictions in the wholesale markets during August and early September, Northern Rock continued to be funded in the short-term by wholesale markets and it was able to maintain a significant balance of assets.

When discussions to sell the business failed in early September, the bank sought help from the Bank of England. The results failed to disclose what rival lender Northern Rock had been in acquisition talks with but at the time rumours were rife that it was Lloyds TSB that was eyeing up the sponsors of Newcastle United Football Club.

Northern Rock's results confirmed following the collapse of these talks and media coverage of its call on the Bank of England's reserves retail depositors pulled £12.2bn out of their savings accounts during the second half of 2007.

The industry also finally discovered the full extent of the lender's pull on the Bank of England's reserves. On page 30 of the report, Northern Rock announced by the end of December it had borrowed £26.9bn from the nation's taxpayers.

By the end of March the lender had paid the Bank of England £2.9bn back. The lender still has £24bn to go.

Turning to the future prospects of the nationalised lender, the results revealed the bank's management was not looking to making a profit again until after 2011, once the loan from the Bank of England has been repaid in full and the release of the Treasury arrangements has been completed.

The company will contract into a smaller and more sustainable business, reducing the balance sheet from £107bn to around £50bn by the end of 2011, the results reported. Secured lending would also be discontinued as the nationalised lender hoped to reach a point when it could return to private ownership.

Ron Sandler, who was appointed executive chairman of Northern Rock after it was nationalised in February, said the bank would not be "market leading but competitive" with plans to generate about £5bn of mortgage business a year.

Total gross lending for last year including commercial, residential and unsecured was £32.25bn, only slightly down compared with £32.98bn in 2006.

Mr Sandler said the business plan had struck a "sensible balance" between not using government support to compete unfairly with rival financial services providers and maintaining a financially secure business.

However George Osborne MP, shadow chancellor of the Conservatives, said despite nationalising Northern Rock troubles for the Newcastle-based lender, one of the biggest employers in the north east, were still far from over.

He said: "We discover that this company we now own is expected to make a substantial loss this year. We know that as owners of this business, we are going to have to pay nearly £50m to bankers, lawyers, accountants and PR companies for Gordon Brown's six months of dithering. There is still deep confusion about when taxpayers will get their money back from the Northern Rock fiasco."