Rock’s ‘on the way to revival’
May 13 2008 By Andrew Mernin
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But he said that the Rock was making “solid progress” with its business plan and said that plans to clear its £24.1bn Bank of England debt by 2010 remained on course.
Northern Rock was saved by public cash after a funding crisis last September, sparking the first UK bank run for more than 140 years.
The bank was nationalised in February after being crippled in last August’s freeze in money markets, where it borrowed most of its cash for lending, after years of rapid growth.
The company said yesterday that the majority of the 2,000 job losses which are expected at the firm by the end of 2011 would occur this year following a 90-day consultation period with unions which began earlier this month.
But Mr Sandler said the bank was continuing to look into touting administrative services to other lenders in a bid to reduce staff losses. He said: “We are certainly exploring the possibility of collaborating with other lenders using our back office staff and the processing capabilities that we have.”
The executive chairman also said the company plans to complete the currently under-construction 125,000sqft, nine-storey tower at its Gosforth headquarters with a view to selling it or taking up residence in part of it. Northern Rock yesterday revealed that mortgages three months in arrears rose to 0.95% at the end of April, compared with 0.57% at the end of December.
However, the company said that the overall credit quality of its loan book remained satisfactory and at a level assumed in the bank’s strategic plan.
A key part of Northern’s plan has been to reduce its balance sheet to a sustainable level, mainly through a higher rate of mortgage redemptions. It has sought to achieve this by assisting borrowers to transfer their mortgages to other lenders at the end of their fixed or discounted period.
The bank is offering a limited range of new mortgage products, with gross residential mortgage lending in the first quarter of the year being a “modest” £1.2bn.
In line with its plan to achieve a more balanced mix between retail and non-retail sources of funding, Northern Rock has begun to rebuild its retail savings deposit base after the run on the bank in September. It ended the quarter at £12.8bn. Mr Sandler added: “We remain firmly focused on our business priorities of repaying the Government debt, releasing the guarantee arrangements and, in due course, returning Northern Rock to private ownership.
PAGE TWO: A look back at the fall-out from the Northern Rock crisis.
