By Marcus Leach
Nationalised lender Northern Rock has announced a loss of £232.4 million for 2010, but insists progress has been made with income up and costs reduced.
Having been nationalised in 2008 following its collapse amid the credit crisis bosses insist progress was made in 2010, narrowing losses in the second half of the year to £92.4 million.
"2010 represented a year of significant restructuring for Northern Rock plc, as well as being its first full year of trading,” executive chairman Ron Sandler said.
“The Company successfully met a number of objectives under the restructuring plan. Following the completion of the legal and capital restructure at the start of the year, the Government guarantees for retail savings and wholesale funding were released in 2010, well ahead of plan. The Company also successfully completed operational separation from NRAM.
"Financial performance was in line with expectations in 2010. While it is always disappointing to report a loss, this in part reflects the high level of liquidity held, the costs incurred in relation to the Government’s retail and wholesale guarantees, which have now been removed, and other exceptional costs incurred as the Company was restructured.”
Despite the pre-tax losses the bank has opted to pay staff £13.1 million in bonuses. Most of the bank's 4,500 staff, who on average earn £25,000 a year, will receive a payout of around 10 per cent of their salary.
The bank said it continued to work closely with UK Financial Investments (UKFI), the body charged with overseeing the Government's banking assets, to return the company to private ownership.
“It remains a difficult trading environment for a small bank dependent on retail funding, with a combination of low interest rates, subdued mortgage market demand and high competition for retail savings,” Sandler added.
“However, the underlying loss incurred in the second half of the year was lower than in the first half, demonstrating that progress is being made, and I am confident that the Company is on the right trajectory to profitability. “We continue to work closely with UKFI on the strategic options for returning the Company to private ownership, in the best interests of taxpayers, and we will provide a further update in this regard in due course.”
David Fleming, national officer of Unite, the union, commented on the results:
“While Northern Rock appears to be making slow progress the figures today have come at a heavy price. With over 2,500 staff having paid with their jobs for the scandalous behaviour of the previous management, this gradual recovery is not enough.
“Since the near collapse of the bank in 2007 the workforce has faced an uncertain future, not only have they seen jobs slashed they have had to watch as this previously respected North East based company has had its reputation destroyed.
“Serious consideration is now overdue for Northern Rock to be returned to mutuality in order to give it a fighting chance to deliver the recovery it desperately needs. While the coalition claim to support a diverse financial services industry, their pursuit of a private buyer for Northern Rock demonstrates that this is merely rhetoric.”