Loss-making Northern Rock hands out £13.1m in bonuses

Northern Rock, the nationalised bank which is being prepared for a return to private ownership, lost £232 million last year but is still paying £13.1 million in bonuses for hitting recovery targets.

Chairman Ron Sandler, who does not get any bonus, said the pay-out was split among 4500 current and former staff with average bonuses of around £3000. The only director to get a bonus is finance director Jim McConville who gets £185,000.

Sandler said he hoped City advisers would be appointed shortly, but the decision on which option to follow from a share sale to a trade could take some time.

He admitted it was disappointing that Northern Rock remained in the red and would not predict when it might become profitable.

The Northern Rock boss also defended its recent launch of mortgages of up to 90% of a home's value, saying: "We are growing the business and are looking to exploit niches like first-time buyers in this case."

Sandler said there had been a distinct improvement between the first and second half, partly reflecting a lower cost to Northern Rock of the Government's guarantees on savings of more than £50,000 which were brought in to prevent a run on the bank.

With £5.9 billion of liquid assets, Northern Rock is now one of the best capitalised banks in the UK.