Northern Rock staff to receive bonuses of up to £3,000
Mar 10 2010 By The Journal
THOUSANDS of Northern Rock staff will receive bonuses of up to £3,000. The windfall comes as a reward for helping the bank slash its losses last year, it was announced today.
Bank bosses today paid tribute to the 4,500 employees - the vast majority based in Newcastle and Wearside - for their part in helping to cut losses from £1.36bn in 2008 to £257m in 2009. The figures were well ahead of the targets laid down by the Government for the nationalised bank.
Chief executive Gary Hoffman - who waived his entitlement to a £700,000 bonus - said it was right hard-working head office, call centre and branch staff were rewarded for helping to rebuild the troubled bank. The staff earn an average salary of around £22,000 and will earn average bonuses of "less than £3,000", depending on personal performance criteria, he said.
"These results today are a credit to the ongoing hard work of my colleagues here at Northern Rock, principally in Newcastle and Sunderland," said Mr Hoffman.
"Northern Rock has turned a corner and it certainly feels a very different place to where we were just a year ago."
He insisted that the bonus payments were "not a reward for failure".
"I understand that we are still loss making but we have beaten our targets by a substantially improved performance," he said. "It is absolutely right that nearly all of the benefit from that goes back to the taxpayer, but a very small percentage should go to the people who delivered that performance."
Senior managers will also receive bonuses, with 32 individuals earning one-off payouts of more than £25,000.
The bank also revealed today that mortgage arrears had stabilised during the second half of 2009. The number of mortgage accounts over three months in arrears was 4.28% in 2009, up from 2.92% in 2008. The number of homes in repossession fell, however, from 3,620 in 2008 to 2,061 in 2009.
Northern Rock said it had invested in a "debt management programme" that had allowed 1,700 customers to stay in their homes thanks to what it called "innovative rescue solutions".
The bank said it had seen an increase in mortgage lending across the year, while the amount of money people saved was largely unchanged. It said the quality of new mortgage lending remained "high" with an average loan-to-value of 56%.
Today’s results are the last for the old Northern Rock company, which was split into two separate businesses on January 1. Mr Hoffman said today there was no further update on a potential sale of Northern Rock (Asset Management) - the so-called "good bank".
He repeated comments made to the Chronicle last month that "informal discussions" had taken place with potential buyers, but there was "no formal timetable" and "no rush" for a sale.
"This final set of results for the former Northern Rock demonstrates some encouraging trends," said Mr Hoffman.
"We are on the right trajectory and this is credit to the hard work and dedication of all of our employees."
Last month, it was announced that savers with money in the Rock would lose the government’s 100% guarantee on their deposits from May 24. Savers will still benefit from a £50,000 guarantee under the Financial Services Compensation Scheme.