Northern Rock chief Gary Hoffman says bank has turned corner

Mar 11 2010 The Journal

NORTHERN Rock chief executive Gary Hoffman yesterday proclaimed the troubled bank had “turned the corner” after revealing it made smaller than expected losses in 2009.

Announcing its annual results yesterday, Mr Hoffman also agreed that the nationalised bank, once sold back to the private sector, could ultimately yield a profit for the taxpayer.

Yesterday’s results showed the Newcastle bank made pre-tax losses of £257m in 2009 - including a £467m profit in the second half of the year, substantially down from annual losses of £1.4bn in 2008. Underlying losses of £383m were around £500m lower than the target set by the Government.

“We have turned the corner,” said Mr Hoffman. “Compared with how we felt two-and-a-half years ago or even just one year ago, we are in much better shape.”

Mr Hoffman also defended bonus payments made to staff which totaled £15m. The majority of the Rock’s 4,500 staff will receive payments of around £3,000 on top of their average annual salaries of between £20,000 and £25,000.

“I understand that we are still making a loss but we have beaten our targets by a substantially improved performance,” said Mr Hoffman, who waived his right to a £700,000 payment. “It is absolutely right that nearly all of the benefit from that goes back to the taxpayer, but a very small percentage should go to the people who delivered that performance.”

He added: “I think people are quietly pleased with the progress that we are making, but one swallow doesn’t make a summer. It does feel as though we are now looking forward.”