THE bank holding Northern Rock’s toxic assets has nearly doubled its profits as it claws back arrears on mortgages – and it is creating 100 North East jobs to speed up the work.
Northern Rock Asset Management (NRAM) – which was created when Newcastle-based Northern Rock was split into two last year – said cutting costs by nearly a third to £53.7m also helped push underlying profits up to £344m for the first half of this year, compared to £181.8m a year earlier.
And NRAM said it has paid another £1bn back to the Government and plans to pay most of the remaining £47.7bn it owes within the next decade.
The company is owned by Government-owned holding company UK Asset Resolution (UKAR), which said it was looking to increase savings in the next year by speeding the merger with its other asset, Bradford & Bingley.
And despite concerns about the “continuing pressure” on home-owners it hopes to further slow the increase in arrears. It recruited 100 extra staff to its Sunderland offices last year to negotiate with customers and will add another 100 staff to its 1,200 North East workforce this year to speed up the work.
UKAR chief executive Richard Banks said: “Our aim is to maximise value for the taxpayer and we have accelerated the repayment of Government debt with a further £1bn repaid in the first half of 2011 – that is around £2.1bn in the last 18 months.
“We are making progress and the rate of repayment is accelerating all the time. We are negotiating with our customers and working with them to find a way they can pay back what they owe, that is why we are taking on extra staff at Doxford Park.”
He said its merger with Bradford & Bingley was “progressing well”, and that B&B’s underlying pre-tax profit was up from £83.6m to £152m with ongoing costs down 10% to £52.6m.
NRAM was the so-called ‘bad bank’ part of Northern Rock when the two were split apart by the Government. The ‘good bank’ was Northern Rock plc which reported a £232.4m pre-tax loss for 2010 as it rebuilds its business in preparation for sale back to the private sector.
The deadline for bids closed yesterday and bidders are understood to include Sir Richard Branson’s Virgin Money. Yorkshire Building Society had been mooted as a bidder but yesterday said it had decided against throwing its hat into the ring.
