In a recent report the stricken bank, Northern Rock, which has now been nationalised, has promised that it will repay its state loan of £24 billion by 2010. The bank hit problems last year, when it had to take an emergency loan from the Bank of England, and once this became public knowledge the lender was thrown into turmoil, as billions of pounds worth of savings were withdrawn over the space of a few days and share values plummeted. Earlier this year the bank passed into public ownership, although the government assured the public that this was simply a temporary measure.
There are concerns over the promise that the Rock has made to repay the debt by 2010, as it has also warned that it will take around three years for it to simply break even. Rock officials have even said that it will be ’significantly loss making’ this year. Its former Chief Executive, Adam Applegarth, has also been given severance pay of over three quarters of a million pounds, according to recent reports.
With regards to this payoff Roger Lawson of the Northern Rock Shareholders Association Group, stated: “A lot of shareholders will be very unhappy with the size of Mr Applegarth’s payoff but it looks like legally, the company could not have avoided paying that amount. Had Mr Applegarth taken the company to court then it could have ended up having to pay him even more.”
Over the next few years the government appointed boss of Northern Rock, Ron Sandler, has said that he will be scaling down the size of the business and making cutbacks that include around two thousand jobs. However, officials from Unite said: “Unite is calling on the company to ensure that any proposed restructuring must consider the welfare of employees and long-term success of the bank. Decisions must not be made merely in the pursuit of short-term cost savings.”
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