Rock is ready to roll in new era of growth

Mar 4 2009 by Andrew Mernin, The Journal

THE head of Northern Rock last night said the bank’s new lending strategy could mark the end of downsizing at its North East headquarters and the start of a new era of growth and recovery for the brand.

The nationalised lender yesterday said it had made pre-tax losses of £1.36bn in 2008 in a year which saw it repossess 3,620 homes - 63% more than at the same stage a year earlier.

However, as the Rock opened the books on a tumultuous year of upheaval in the aftermath of nationalisation, chief executive Gary Hoffman said its plan to lend up to £14bn in new mortgages by 2011 had seen customers flocking back through its doors.

He also said the new lending strategy had given renewed stability to its remaining 4,500 workers and could even lead to new jobs being created at its Gosforth headquarters in the long term.

The bank confirmed that it has now reduced its Government loan by £18bn to £8.9bn, compared with £26.9bn at the end of 2007, while its residential mortgage balance was reduced by 27% in 2008 to £66.7bn.

Mr Hoffman, said the bank had made good progress on its objectives laid out in March last year and could now return to “growing to success rather than shrinking”.

He said: “Northern Rock is in much better shape going into 2009 than it was going into 2008. We have delivered on our promise to repay £18bn of the Government loan and that has given us the right to return to mortgage lending.

“This gives us much more stability. Lots of people were concerned that there would be another round of redundancies because of our shrinking. With this new stability and new lending of money there’s more job security for people here and maybe in the future we might even add more.”