The Wall Street Journal March 10, 2010, 7:36 A.M. ET
Northern Rock's Government Loan Surges By Madeleine Nissen
LONDON--Northern Rock, the mortgage lender nationalized by the U.K. government after its near-collapse, said its net loss narrowed in
2009, while its loan from the government rose sharply.
Northern Rock's full-year net loss narrowed to £309.1 million ($463.5 million) from £1.38 billion in 2008. In line with many other U.K. bank executives, Northern Rock Chief Executive Officer Gary Hoffman waived his bonus entitlement for 2009, which he said would have been £700,000.
Northern Rock said the government loan increased to £22.8 billion, after the legal restructuring of the bank into two entities on Jan. 1. At Dec. 31, net borrowings from the government were £10.7 billion, plus £3.6 billion in cash held at the Bank of England.
Northern Rock collapsed in 2007 after suffering a run on deposits and was nationalized in February 2008. The mortgage lender has since been split into a "good" bank?which holds the bank's deposit and some existing mortgages?and a "bad" bank holding mortgages that will be gradually wound down.
The idea is that the good bank will eventually be sold. Mr. Hoffman said Wednesday there is no timeline in place and no deadline set by the government. The removal of the deposit guarantee announced in February 2010 is just one of many steps in that process.
--Margot Patrick contributed to this article.