A great deal has been achieved in the last year; THE BOSS NORTHERN ROCK: ONE YEAR ON Today The Journal begins a three-day-look at the events surrounding Northern Rock, which this time last year saw customers queuing around the block to withdraw funds. Now Ron Sandler talks to Adrian Pearson about the remarkable turnaround.
NORTHERN Rock boss Ron Sandler believes the region can put the last 12 months behind it and revealed "confident" customers have deposited more than pounds 4bn with the bank this year.
In an upbeat interview with The Journal on the first anniversary of the run on the bank, executive chairman Mr Sandler said the bank had attracted billions of pounds worth of new deposits since the Government stepped in to help the bank at the start of the year and promised the next 12 months would see a slow return to greatness for the Rock.
This time last year it was revealed the bank had requested emergency funds from the Bank of England as the lender of last resort. Within hours queues were forming outside branches across the country as worried customers withdrew their savings.
Two days later more than pounds 2bn had been withdrawn in a panic-driven rush to close accounts which was only halted when the Government moved to guarantee all funds in the bank. And as customers and savings return to the bank, Mr Sandler said his difficult six months in charge has seen the Rock turn around as it continues to repay Government loans quicker than expected.
Mr Sandler said: "I look back on the last six months with a great deal of satisfaction, a great deal has been achieved.
"We have repaid almost pounds 10bn from the start of the year, more than a third of our debt. And we have attracted since the beginning of the year pounds 4bn in deposits, which is a modest sum compared to what was lost last year but takes us well back on the trajectory to getting the balance sheet back to where we need it. We have undertaken a very significant restructuring, down from around 6,000 to 4,500 and we achieved that without any disruption to customer service.
"We have also attracted a very able new management team, including a new chief executive and new director of debt management."
Mr Sandler would not say whether last week's decision by the US Government to effectively nationalise its two largest mortgage lenders had vindicated the Government's decision to nationalise the Rock.
"I would neither go in the direction of proving right or wrong, and it is not for me to say if the Government was right or wrong. The fact is this bank was taken into temporary public ownership and the challenge now is to restore it to health and the private sector. The view I have six months on is we are well on the way to doing that."
Mr Sandler expects the bank to be even better placed in a year, and suggested the Rock was unlikely to shed more jobs.
"I think the bank will be marching forward very much along the path we set, and I think the debt will have been repaid somewhat further, very considerably further, and that we will still be attracting new business.
"We will be much more stable this time next year and in the right shape and size, without any further action needed. We will be growing, not massively, but growing from where we are at the present. But I don't think anyone can say when confidence will return to the banking sector.
"We are still working in markets which are at the extreme end of what we would have projected at the start of the year and I don't think anyone has a clear handle on when we will start to return to normality, that depends very much on wider action to restore markets."
I don't think anyone can say when confidence will return to the banking sector
pounds 71bn WIPED OFF
UK banks have seen pounds 71bn wiped off their combined stock market value in the year since the Northern Rock crisis, research revealed yesterday.
Some listed banks have lost more than 90% of their market value as the credit crunch and Northern Rock debacle has hit investor confidence, according to financial information website DigitalLook.com
The sector's troubles have also seen dramatic volatility on the stock market, with daily share price changes of 5% to 10% now commonplace, the study showed.
Banks endured a roller-coaster ride, this week, lifted by news of the US Government bail-out of mortgage bankers Fannie Mae and Freddie Mac, only to have suffered hefty falls since news of woes at US investment banking firm Lehman Brothers.
Halifax Bank of Scotland and Lloyds were suffering falls of 5% and 4% respectively in a second straight session of declines.
FTSE 250 mortgage banks Alliance & Leicester and Bradford & Bingley are among those to see the worst falls over the past year. B&B has seen is market value plummet by 91% to pounds 1.87bn, while A&L's value has tumbled 67% to pounds 2.5 bn.
However, Britain's biggest bank HSBC saw its value rise by more than 2%.
CUSTOMERS RETURNING Northern Rock has attracted pounds 4bn in deposits since the beginning of the year.
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|Publication:||The Journal (Newcastle, England)|
|Date:||Sep 12, 2008|
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