Anger over bonuses for Northern Rock staff

| December 5, 2007
”Anger

Crisis-torn Northern Rock owes the taxpayer £29 billion but has still given its employees a pay rise and a bonus. All 6,000 employees were given a £200 bonus and a 2% one-off sum as well as a 4% increase.

The Government has already paid over £29 billion to rescue Northern Rock from collapse but this could increase to £45 billion by February if a buyer is not found.

Northern Rock customers are said to be outraged and have called the pay rises ‘disgraceful and entirely inappropriate’.

Even Northern Rock’s own employees were shocked by the pay package with one saying ‘we were just glad to still have our jobs at Christmas, let alone an above inflation pay rise and bonuses’.

A spokesperson for Northern Rock described the 2% bonus as a ‘thank-you for all their hard work over the last 12 months and in particular the last couple of months’.

The package comes just 2 months after the Government bailed out the bank with taxpayers’ money. The total award for an average employee earning £25,000 would leave them £1,700 better off.

However, the package is awarded to all employees up to and including assistant directors. Their salary can range up to £100,000. At the highest level this could mean a total bonus package of £6,200.

Staff were informed of the surprising decision in a hand-delivered letter from personnel director Lynne Griffin and union representative Russell Greig last week. The letter read ‘Since September 2007 the company has experienced challenging times and heavy demands have been placed upon our staff. It is felt that the efforts of staff should be recognised’.

A spokesperson for the Taxpayers’ Alliance, said they should be getting pay cuts, not pay rises. Apparently the meaning of performance-related pay is lost on staff at Northern Rock. The spokesperson added that their failure has put tens of billions of taxpayers’ money at risk with billions unlikely to ever be recovered.

Over £10.5 billion from deposit accounts has been withdrawn by savers, leaving total assets of £37 billion.

Last month, Virgin Group was looking the likely suitor for crisis-torn Northern Rock but late last week private equity group, JC Flowers, and investment group, Olivant re-entered bidding talks.

Earlier this week, the board of Northern Rock’s board and its advisers were in discussions and there is now a distinct possibility that there could be a full-blown competitive auction for the bank.

Chancellor Alistair Darling is expecting a bidding war to erupt this week, with a decision on the victor still hoped for prior to Christmas.


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