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Good Rock loses £232m but pays out £13m bonuses

Northern Rock’s “good bank”, Northern Rock plc, made a loss of £232.4m in its first year of trading since the business was split in two in January 2010.

Despite the loss, the bank paid a total bonus pot of £13.1m to its staff in 2010, which it says reflects the fact its objectives have been achieved for the year.

These include the completion of the legal and capital restructure, early release from Government guarantees and separation from Northern Rock Asset Management.

The biggest bonus, totalling £185,000, went to chief financial officer Jim McConville. Chairman Ron Sandler was ineligible for a bonus. The £13.1m bonus pot was shared between 4,000 staff, averaging £3,250 per staff member.

The bank says the loss was in line with expectations and includes significant costs associated with separating from NRAM. The loss for the second half was £92.4m, compared with a loss of £140m in the first half.

Gross residential lending was £4.2bn in 2010 and net residential lending £1.9bn.

Chairman Ron Sandler says: “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.”

Mortgage broker Emba group sales and marketing dir- ector Mike Fitzgerald says: “The people at the coalface were not responsible for the original problem, so they should be rewarded. I feel the guys getting the bigger amounts should probably say we are not taking the bonus but our staff deserve it. It is a shame that did not happen.”

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