Northern Rock Looks Set To Make A Profit In 2012

Wednesday, August 3, 2011
By SHP

Northern Rock’s CEO Ron Sandler is confident that the bank will be making a profit by 2012. He told the FT that they had reduced the losses “significantly” and that business was building up some momentum.

Northern Rock was the first bank to be rescued by the tax payer. In 2007 Northern Rock ran out of cash and panic set in immediately as investors flocked to branches all over the country to withdraw their money before it was too late.

In 2010 there was a major restructure at the bank whereby the “good” assets and “bad” assets were divided and managed separately. The good assets remained with Northern Rock and the poorly performing assets were moved into the Nothern Rock Asset Management division. The result is that the core business is now set to slowly build up again and recent trends are suggesting that a full turnaround is on the cards for 2012.

Northern Rock Takeover

Northern Rock is still a viable takeover target for several businesses including Virgin, JC Flowers. Northern Rock’s CEO has stated that a takeover offer would be seriously considered before any decision was ever made. Nothern Rock is still receiving government support for its operations, although the Asset Management part of the business is now making a profit.

What happens in to the future of Northern Rock could set a trend for other banks that have been bailed out, including Royal Bank of Scotland, Lloyds TSB and HBOS. Once the banks are making a healthy profit and share price improved the government may start to look to release some of the control and the equity to help pay off some of its debts.

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