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August 3, 2010    

Northern Rock’s bad bank back in profit

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by Kay Murchie

Northern Rock Asset Management (NRAM), the so-called bad bank, has today reported it has returned to profit.

The crisis-torn bank, which was the first victim of the credit crunch, said pre-tax profit for the first six months to the end of June were £349.7 million, compared with a loss of £724.2 million a year earlier.

Meanwhile, the so-called good bank of profitable assets made a pre-tax loss of £142.6 million.

Today’s results represent the first since the bank was split into two divisions in January.

Chief executive Gary Hoffman said NRAM was “continuing to make good progress”.

He added: “The company is well positioned to capitalise on future growth opportunities and is now able to compete on the same terms as other banks and building societies.”

Northern Rock collapsed in the autumn of 2007 when savers staged a nationwide run on the bank.

This signalled the onset of the banking crisis and it was subsequently nationalised in February 2008.

The UK Financial Investments, the body which was set up at the height of the financial crisis to oversee taxpayers’ interests in High Street banks, plans to merge NRAM with Bradford & Bingley.

Meanwhile, the figures come just 24 hours after banking giant HSBC reported profits more than doubled, exceeding analysts expectations.

HSBC, which is Europe’s largest bank, announced a pre-tax profit of $11.1 billion (£7 billion) for the six months to the end of June, compared with $5 billion in the same period a year ago.

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