NORTHERN Rock warned yesterday that further job cuts were likely despite the bank paying out £13.1m in annual bonuses to staff.
Northern Rock plc – the “good” mortgage and savings bank which was separated last year from the “bad” bank Northern Rock Asset Management (NRAM) – said its 4,500 staff would receive an average of around £3,000.
Just one director – chief financial officer Jim McConville – will receive a bonus, amounting to £185,000. Executive chairman Ron Sandler, who is paid £250,000 a year, was not eligible for the payment.
The bank decided to award the bonuses for 2010, despite ending its first full year of trading in the red to the tune of £232.4m.
Mr Sandler, who said the losses were disappointing but expected, defended the bonuses, calling them “modest and appropriate”.
He said Northern Rock had brought in a “large number” of new people, particularly at senior levels, to help with the restructuring of the bank and it was necessary to offer them incentives to attract them.
“The staff will not receive a pay rise this year and the senior management team have not had a pay rise in four years,” he said. “The board agreed the bonuses subject to individual performances. The average salary is a little over £20,000, so it will typically be in the £3,000 range.
“All staff in the company are eligible including those who transferred to NRAM and those made redundant at the end of last year.”
Mr Sandler admitted it was a “period of uncertainty” for staff and said the bank had made it clear to the workforce that it was “not a case of business as usual”.
“We are not yet at the stage of identifying specific redundancies and we are trying to be open and honest with the staff about the challenges that we face,” he said.
“It is a fact that we have a cost base which is oversized relative to the business. We have a need to grow into our shoes but we must also pay close attention to the size of those shoes.”