The new boss of Northern Rocks says it will take years for the bank to pay back its loans from the taxpayer.
Executive chairman Ron Sandler has been charged with finding a viable business plan for the lender and was speaking after meeting managers and staff.
When asked about the loans he said: "It is clearly unrealistic to talk about months. We are clearly talking about a period of some years."
He also said it was too early to say if Northern Rock would cut jobs.
The Prime Minister Gordon Brown has been defending the government's decision to nationalise Northern Rock.
The Prime Minister Gordon Brown has been defending the government's decision to nationalise Northern Rock.
At a Downing Street briefing he called it "the right move at the right time for the right reasons".
At a Downing Street briefing he called it "the right move at the right time for the right reasons".
The government's move has been fiercely criticised by shareholders who face losing almost all of their investment.
The government's move has been fiercely criticised by shareholders who face losing almost all of their investment.
Shadow chancellor George Osborne said the nationalisation plans were "catastrophic," and that they would be opposed by the Conservatives.
Shadow chancellor George Osborne said the nationalisation plans were "catastrophic," and that they would be opposed by the Conservatives.
Trading in Northern Rock shares has been suspended.
It is the biggest decision made yet by this Prime Minister Robert Peston, BBC Business Editor Read Robert's blog
The prime minister said that the government had considered two offers from private sector buyers for Northern Rock, but decided not to accept them.
"We will have and always will put the interests of taxpayers first," he said.
When asked about the prospect of job cuts at the bank, the prime minister said: "If we hadn't intervened in August it would have gone under, we ensured an existence for the company.
"It was the best decision to protect depositors, mortgages holders and employees of Northern Rock."
Turned down
Chancellor Alistair Darling said the two private takeover offers did not offer the taxpayer "sufficient value for money".
Nationalisation is not the right answer and a commercial solution would have been the best way forward Richard Branson,Virgin Group
"We had independent advisers look at this, and they all pointed in one direction: the best thing to do was to take the bank into a period of temporary public ownership before ultimately trying to return it to the private sector," he told the BBC.
UK taxpayers are now subsidising the bank in loans and guarantees to other lenders to the tune of about £55bn. Under the new strategy this will jump to £110bn, a cost of £3,500 per taxpayer.
Explaining the government's decision, Mr Darling said it was better for the government to hold onto Northern Rock until market conditions improve and its value increases.
He emphasised that "the long-term ownership of this bank must lie in the private sector".
A consortium led by Richard Branson's Virgin Group had put forward a rescue proposal for the beleaguered bank.
"We believe nationalisation is not the right answer and that a commercial solution would have been the best way forward," Mr Branson said in a statement.
The board of Northern Rock, which had also put together a rescue package for the bank, said that it was "very disappointed" with the government's decision.
Shareholders worried
The government said that it will introduce emergency legislation to temporarily nationalise the stricken Northern Rock bank.
Under nationalisation rules, Northern Rock's shareholders will be offered compensation for their holding at a level set by a government-appointed panel.
The calculation will be based on the bank's value without government guarantees.
However, analysts say under those conditions shareholders will receive very little.
It seems likely that shareholder groups will take legal action over the government's move.
Roger Lawson, chairman of the Northern Rock Shareholders' Action Group said he thought there were "good grounds" for legal action.
"We've already considered it and obviously SRM - who are one of the major institutional shareholders - have effectively promised legal action already if nationalisation went ahead," Mr Lawson said.
Job cuts?
Ron Sandler, the former boss of the Lloyd's of London insurance market, will lead Northern Rock.
Mr Sandler is widely respected for restoring confidence in Lloyd's after its years in financial disarray.
