Northern Rock sees losses narrow

| March 10, 2010
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State-owned bank Northern Rock has today announced losses for the 2009 year fell to £258 million, compared with £1.36 billion in the previous year.

Despite the loss, the Newcastle-based bank said it is awarding staff £14.9m in bonuses but Gary Hoffman, the chief executive of Northern Rock, is waiving his payout.

Northern Rock said Mr Hoffman’s long-term incentive plan would only pay out after the bank returned to profit or was sold. A sale of the bank is expected later this year.

Meanwhile, the bank said the mortgage arrears rate rose in the first half of 2009 before stabilising in the final quarter.

Residential mortgage accounts over three months in arrears exceeded 4% against 2.92% at 31 December 2008.

Commenting on today’s figures, Mr Hoffman said: “We are looking forward, not back, and my colleagues across the business remain committed to delivering a high standard of service for all of our customers.

“We are on the right trajectory and I am confident that, with the current strong management team in place, we are well positioned to deliver against our objectives in 2010, he added.

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.

On 1st January, it was split into two divisions – a “good bank” of profitable assets and “bad bank” of toxic debts.

Last month, the Treasury announced savers with Northern Rock will lose the Government’s 100% guarantee on 24 May.

The move means the crisis-torn bank is back in line with its rivals but savers will still benefit from the £50,000 guarantee to all savers under the Financial Services Compensation Scheme (FSCS).

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