Rock readies for sale despite losses of £232m

Northern Rock's executive chairman stoked expectations of an imminent move out of public ownership yesterday when he said the bank did not need to make a profit before returning to the private sector.

Ron Sandler made his comments as the bank posted a loss of £232m for last year. He said a clear return to profit would be a benefit in attracting investors but that if it was on track for profit, that could be enough for a move out of nationalisation.

Mr Sandler said the annual loss was "disappointing" but the bank was making progress. "I do not think profitability per se is an absolute precursor when it comes to a return to private ownership," he said. "We believe we are on the right trajectory to return this business to profitability. We wouldn't be exploring options to return to private ownership if we didn't believe we were on that trajectory."

He insisted, however, that no advisers had been appointed to help with a sale and that there was no timetable for privatisation. Routes out of public ownership could include a trade sale, a public offering, or returning the bank to its mutual roots as a building society.

Mr Sandler also revealed that the bank would pay £13.1m in bonuses for 2010 despite its losses for the year. He said that amounted to an average of about £3,000 for each of the bank's 4,500 employees and former staff members covered by the payout.

The biggest bonus was £185,000 for the finance director Jim McConville. Mr Sandler does not get a bonus. Mr Sandler added the route to private ownership could be complicated by Lloyds Banking Group's sale of 600 branches and other bank assets up for grabs in the wake of the crisis.

Northern Rock said losses in the past 12 months were caused by restructuring costs, holding high levels of liquidity, and costs from government guarantees, which have now been removed.

Mr Sandler said returning to profit would depend on increasing lending, cutting costs and getting better returns on surplus liquidity. He said the bank would aim to be more competitive in the market. It recently announced a move back in to 90 per cent mortgages, though Mr Sandler insisted this was not a risky move.

The bank's plan is also at the mercy of wider economic forces and decisions. Low interest rates are not good for a customer-funded business like Northern Rock, and a rise in rates would not ring alarm bells about mortgage arrears, he said.

Mr Sandler added that the economy was still fragile but that the bank was not dangerously exposed to public-sector job cuts in its North-east heartland. Mr McConville said only 197 of Northern Rock's 120,000 mortgages were three months or more in arrears.

Mr Sandler became executive chairman last year after his former chief executive, Gary Hoffman, quit to join an acquisition vehicle that could bid for Northern Rock. The chairman said there was no need to replace Mr Hoffman because he was putting in more time as chairman and other team members were doing extra work.

Northern Rock was nationalised in February 2008 after it collapsed amid the credit crisis, sparking the first run on a UK bank for 150 years.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific