Northern Rock has announced bigger-than-expected losses of £585.4m for the first six months of the year.
Much of the loss came from the charges it takes to cover losses from struggling mortgage borrowers.
But it also managed to repay £9.4bn of a loan from the Bank of England, reducing the amount owed to £17.5bn.
The government, which nationalised the lender in February after the first run on a UK bank in more than a century, will inject £3bn to help its finances.
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In June 2007 the figure stood at 0.38% of mortgages, but it has now risen to 1.18%.
The money for the £3bn cash injection will come by pausing repayments of the giant taxpayer loan made to the bank, and about £3bn of that will be converted into equity.
"Or to put it another way, the nationalised bank is having a mega rights issue that taps its one shareholder," BBC business editor Robert Peston said.
Northern Rock was hit hard by the global credit crunch, and its major form of providing mortgage loans - from the wholesale markets - dried up.
The bank, once Britain's fifth-biggest home loan provider, was taken into public ownership after it failed to find a suitable buyer from the private sector.
(BBC)
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