Government paid back £2bn by ‘bad’ N.Rock bank - Banking - News - Moneyfacts

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Government paid back £2bn by ‘bad’ N.Rock bank

Government paid back £2bn by ‘bad’ N.Rock bank

Category: Banking

Updated: 14/12/2012
First Published: 02/03/2012

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Northern Rock Asset Management (NRAM) paid back £2 billion of its Government loan last year.

The bank was split from the main part of Northern Rock in 2010 after the institution was bailed out with public money in 2008, with Virgin Money taking over the 'good' part of the provider last year.

NRAM, which is managed by UK Asset Resolution, houses the impaired loans and mortgages, with the long term target to eventually wind up the bank.

As a result, no new customers can join the 'bad' part of the bank.

But the bank announced that it made a pre-tax profit of £789.9 million in 2011, a sharp increase from the £191.3 million it reported in 2010.

It also managed to pay back £2 billion to the Government, although its outstanding public debt still stands at £19.7 billion.

The chairman of UK Asset Resolution said NRAM was making 'good progress' with its objectives and 'made significant repayments of Government loans'.

However, he warned: " This improving performance is against a backdrop of challenging economic conditions and increasing hardship for some customers."

Bradford & Bingley is also managed by UK Asset Resolution and posted pre-tax profits of £1.1 billion, paying back £150 million of its Government loan in the process.

Figures show that NRAM had 722,000 customers last year, down from 850,000 in 2010.

The bank said that while the overwhelming majority of its customers are able to pay back their loans, there are a significant number who are finding it difficult to meet their repayments.

The bank intervened on 37,000 mortgages last year to help customers pay their loans but had to make 2,705 repossessions, up from 2,607 in 2010.

More problems are expected in 2012, NRAM warned.

"2011 has been a year of change and challenges and the outlook for the UK and wider economy continues to remain uncertain," it said.

"While interest rates remain lower than previously anticipated, higher inflation and rising unemployment continue to put pressure on household incomes and we expect more customers to experience difficulties during 2012.

"We are developing our programme of proactive contact with those customers in financial difficulty."

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