Richard Pym to chair Northern Rock ‘bad bank’

| December 15, 2009
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Richard Pym, the chairman who was appointed to stabilise Bradford & Bingley last year, is to oversee Northern Rock’s ‘bad bank’ operations.

It was announced earlier this month that nationalised Northern Rock would be split into two, after receiving the necessary approval from the European Union (EU).

New Years Day is the date that has been agreed for the Rock to be split into two divisions – a “good bank” of profitable assets and “bad bank” of toxic debts.

The ‘bad bank‘, which is to be called Northern Rock (Asset Management) plc will be run by Mr Pym, who was chief executive of Alliance & Leicester between 2002 and 2007.

The bad bank will hold the bulk of the mortgage book (currently around £50 billion) and will be responsible for the repayment of the outstanding Government loans.

Meanwhile, Northern Rock chairman Ron Sandler will become chairman of the ‘good bank’, also to be called Northern Rock. This division will hold its savers money, carry out new lending and retain some of its existing mortgages.

In addition, Gary Hoffman, the former Barclaycard chief, will continue as chief executive of both divisions.

In a statement, Northern Rock said: “Richard [Pym] will bring expertise and experience from Bradford & Bingley, a similar mortgage company, where he will continue in his role as chairman.”

Mr Pym will be paid £250,000 for chairing Bradford & Bingley and Northern Rock (Asset Management), according to The Times.

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.

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