Northern Rock sees improvement prior to split

| November 4, 2009
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Crisis-torn Northern Rock, which is due to be split after receiving approval from the European Union, provided an upbeat statement after it said that in the three months to the end of September, losses from bad loans being written off had lowered, its costs remained under control and net income had risen.

Northern Rock collapsed at the onset of the credit crunch in autumn 2007 after savers staged a nationwide run on the bank. It was then nationalised in February 2008.

It is due to be split into two divisions – a “good bank” of profitable assets and “bad bank” of toxic debts.

Gary Hoffman, Northern Rock‘s chief executive, said: “Financial performance in the second half of the year is expected to show a significant improvement on the first six months. I am encouraged by the improving financial performance of the company. Today’s results demonstrate that we are continuing to make good progress.”

The lender said it has been supporting Government schemes and working with debt advice companies and, as a result, has helped over 1,000 customers facing financial difficulty to stay in their homes by maintaining repossession as a last resort.

The proportion of Northern Rock’s residential mortgage holders who were more than three months in arrears on their home loan repayments rose to 4.11% by the end of September.

While this was higher than the 3.92% seen in the previous three months, the rate of increase has slowed in the last quarter.

Meanwhile, a trading statement said: “The company remains cautious as to the medium-term outlook, given rising levels of unemployment and weakness in the wider economy.”

Northern Rock received almost £27 billion in an emergency loan and said its remaining loan to the UK Government is £14.5 billion.

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  1. john summers says:

    sirs,

    Has the Government lost track of reality?
    There are many individuals with millions in savings, invested in Northern Rock because it is 100% safe.
    Does the Government not realise the Northern Rock will have investors moving tens of millions until they are safe under the FSA bamnner of £50,000.00

    A bit like when Northern Rock started to go under??

    John