In its half-year results this week, Rock says due to deterioration in market conditions, the new cash is needed for regulatory capital requirements.
The Treasury is to convert its holding of £400m preference shares into ordinary shares and will swap up to £3bn of debt into equity, subject to European state aid approval.
The results show Rock has reduced its original Government loan by 35 per cent from £26.9bn to £17.5bn, discounting this new equity swap.
Arrears over three months have more than doubled since the start of the year from 0.45 per cent to 1.18 per cent.
Rock has appointed Gary Hoffman as chief executive, Rick Hunkin as chief risk officer, Richard Smelt as human resources director and Andy Tate as director of debt management.
Lib Dem Shadow Chancellor Vince Cable says: “£3.4bn of the Government’s loan to Northern Rock is now being converted into ordinary shares, which rank right at the bottom for repayment. Continuing losses at the bank put this money at great risk.”