Northern Rock has said that it made 'good progress' in 2009, as it reported a sharp fall in its annual losses. The bank lost £257.4m last year, compared with £1.36bn in 2008. It said it had seen an increase in mortgage lending across the year, while the amount of money people saved with the bank was largely unchanged.
Since 1 January, the Rock has been split in two, with savers' money held by a 'good bank', Northern Rock PLC, which will eventually be sold. The sale will recoup some of the billions of pounds of public money that was injected into the bank to keep it going. The other half of the old bank - renamed Northern Rock Asset Management - holds most of the bank's old mortgages.
Northern Rock said it was paying staff £14.9m in staff bonuses after its losses narrowed - though chief executive Gary Hoffman had waived his bonus. His long-term incentive scheme would only pay out after the bank returned to profit or was sold, the company said. The Rock said that the percentage of those in arrears with their mortgages had risen to 4.28% by the end of the year, compared with 2.25% a year earlier. But it said insisted it was working to help those in debt, and that it had repossessed 2,061 homes, down from 3,620 in 2008.
The collapse of the Northern Rock in the autumn of 2007 signalled the onset of the banking crisis. The government stepped in with funds to try to stop a run on the bank, and Northern Rock was subsequently nationalised. Last month, it was announced that savers with money in the Northern Rock would lose the government's 100% guarantee on their deposits from 24 May. Savers will still benefit from the £50,000 guarantee to all savers under the Financial Services Compensation Scheme (FSCS)."
BBC News
