Northern Rock suffers £585.4 million loss
- 00:02:15
- ITN
Northern Rock suffers £585.4 million loss
Northern Rock has announced losses of £585.4 million for the first six months of this year. The recently-nationalised mortgage lender said the number of customers falling behind with repayments had jumped sharply, resulting in its bad debts provision standing at £351.8 million. Bosses said the former bank had managed to repay £9.4 billion of the Bank of England loans, taking the amount owed at the end of June down to £17.5 billion. Executive chairman Ron Sandler said: "The external environment has deteriorated and the consequences of this for Northern Rock are increased credit losses." Northern Rock said last week that it was to make around 1,300 redundancies as part of its efforts to shrink the business. The job cuts relate to previously announced plans by the Newcastle-based business to cut 2,000 staff by 2011. Mr Sandler said: "This has been a challenging process, and inevitably one which is highly unsettling for the organisation. "Nevertheless, the company remains on track to conclude this process and achieve the necessary reductions in line with the plan. "While the losses reported today are likely to continue as the restructuring proceeds and as the credit environment remains difficult, I am confident that the foundations have been well laid for recovery and return in due course to private ownership." Chancellor Alistair Darling said Northern Rock was repaying its debt. He said the bank's capital base was being strengthened mainly through converting up to £3 billion outstanding debt into equity because it needed more share capital. "We have said we will put in up to £3 billion. We have got to get state aid approval for that so we can't give a precise figure," said Mr Darling. But he said the bank was facing a "very difficult time" in common with other banks around the world.
ITN | August 5, 2008
