Taxpayers promised repayment
Filed Under: UK Banks
Despite continuous warnings of not breaking up for three years the newly nationalized bank, Northern Rock promised that it would repay the ?24bn state loan till the end of 2010. The bank has also added that after the pre tax loss of about ?167.6m in 2007, it would again be making huge losses in the current year. It was also revealed that the bank would be paying Adam Applegarth, the former chief executive an amount of about ?785,000 which is a part of the severance agreement.
On the other hand the shareholders have heavily criticized the various payout plans of the bank as it was already in various problems. In 2007 the bank was helped by the Bank of England as it was very close to solvency. According to the spokesmen’s of the bank, it ran into further depth of problems because of its efforts to avoid nationalization. These efforts which included payments to government and the professional advisors cost the bank something around ?50m.
On the other hand on its efforts to curb losses, the bank will be cutting down costs by about 20 percent along with a reduction of manpower to about a third of the existing one. There are also various small business plans on the way which would bring down the balance sheet of the company to about ?50bn from ?106bn of the previous year. The main reason for the collapse of the bank has been referred to the global credit crisis, led from the slow market in the US.
Popularity: 91%
