Northern Rock to post first results since crisis
Northern Rock will this week reveal details of the pay-off for its former boss and millions paid in advisory fees when it posts results for the first time since the bank’s crisis, it was reported today.
The now-nationalised lender will show that former chief executive Adam Applegarth could receive up to £760,000 (€957,550) after quitting last December.
The “golden goodbye” is due to be outlined in Northern Rock’s annual report due out tomorrow, which will also finally include the bank’s long-awaited results for 2007.
The report is expected to show that Northern Rock forked out more than £55m (€69m) in fees to legal, banking and accounting advisors in the strategic review that led to its nationalisation last month.
Northern Rock’s results – originally due to be published months ago – will also reportedly see it admit that interest payments to the Bank of England and a raft of write-downs related to the US sub-prime mortgage crisis wiped out profits last year.
It is believed that the financial hit from Northern Rock’s “toxic” debt totalled around £400m (€504m).
Northern Rock was forced to go to the Bank of England for emergency funding last autumn when its funding lines dried up amid the credit crunch.
Its funding troubles panicked depositors, with thousands queuing up to withdraw money in the first run on a UK bank in more than 140 years.
The 2007 results will show for the first time the exact amount borrowed from the Bank of England last year and the extent of the deposits and mortgages gained and lost, although trading since the year-end is not set to be included.
Northern Rock’s new boss is also scheduled to use the report to provide a fuller update on his business plan for the Newcastle-based lender.
He may reveal that the bank’s £100bn (€126bn) mortgage book has already been considerably reduced as part of plans to scale back the business and pay off its vast borrowing before a return to the private sector.
Mr Sandler, the new executive chairman, set out plans earlier this month to axe around a third of the company’s 6,000 jobs to slim down the company.
Details of director leaving packages are likely to come under fire from staff and shareholders who are paying the price for the crisis at the company.
Disgruntled investors in the lender have seen Northern Rock’s value slump to less than a tenth of its £5.3bn (€6.6bn) stock market peak a year ago before its shares were suspended.
They have threatened to sue the Government unless it pays fair compensation for their shares and have accused it of a breach of human rights.
Meanwhile, it is also reported that Northern Rock is in talks with the 85% of staff at the group who participated in its employee share scheme and have lost most, if not all, of their money.
