LONDON: British bank Northern Rock, nationalised three years ago to avert financial meltdown, suffered fresh losses in 2010 owing to costs linked to its massive state bailout, it said on Wednesday.
The lender was broken up into two parts at the start of last year, forming a so-called "good bank" for its healthy businesses and a "bad bank" management company to wind down the bad assets.
The "good bank" -- Northern Rock Plc -- posted its first set of annual results on Wednesday and revealed a pre-tax loss of £232.4 million (271 million euros, $377 million).
However, underlying losses narrowed to £92.4 million in the second half of 2010 from £140 million in the first half.
The company is meanwhile working alongside the government to assess options for returning Northern Rock to the private sector -- but did not specify when this could happen.
"Financial performance was in line with expectations in 2010," Northern Rock executive chairman Ron Sandler said in the results statement.
"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.
"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."
UK Financial Investments Ltd (UKFI) was created in late 2008 to manage the British government's holdings in the financial sector.
Despite the annual loss, Northern Rock said that it would pay out £13.1 million in 2010 bonuses to its 4,500 staff. Sandler is not eligible for a bonus.
The results sparked deep anger from Unite, which is Britain's biggest trade union.
"While Northern Rock appears to be making slow progress the figures today have come at a heavy price," said David Fleming, Unite national officer.
"With over 2,500 staff having paid with their jobs for the scandalous behaviour of the previous management, this gradual recovery is not enough."
Northern Rock collapsed in mid-September 2007 when its exposure to the credit crunch forced it to seek emergency assistance from the Bank of England, sparking the first run on a British bank in recent history.
To prevent a wider system meltdown, the government agreed in December 2007 to guarantee all customer deposits held at the struggling group, before taking the lender over in early 2008.
Comments
Comments are closed for this article.