Northern Rock says former boss to forfeit dues

5th November 2010, Comments 0 comments

British state-owned bank Northern Rock on Friday said former chief executive Gary Hoffman has agreed to forego salary and benefits still owed to him, after heavy criticism from union bosses.

Hoffman announced on Thursday that he was stepping down with immediate effect to become chief executive of NBNK Investments -- a new banking start-up.

"Northern Rock confirms that Gary Hoffman has voluntarily waived his contractual right to be paid salary, pension and benefits for the period of his 'garden leave,'" the bank said in a statement.

Hoffman had been due to receive a monthly salary of 58,000 pounds (66,900 euros, 94,200 dollars) until April, when he becomes boss of NBNK Investments.

He had also been due a monthly pension payment of 23,000 pounds as well as a monthly car allowance worth 1,000 pounds -- a package described by unions as a "punch in the stomach" for the 2,500 people who have lost their jobs at the bank.

Britain's largest trade union, Unite, expressed satisfaction at Hoffman's decision, adding that its anger had reflected "the mood of both the workforce of the bank and the public that there was simply no justification for such an award."

However, the 47 year-old Hoffman is widely credited with turning around the crisis-ridden bank after a government bailout.

The bank collapsed in mid-September 2007 when its exposure to the credit crunch forced it to seek emergency assistance from the Bank of England, sparking the first run on a British bank in recent history.

With meltdown looming, the British government intervened in December 2007 to guarantee all customer deposits before taking the lender over in early 2008.

The bank was split at the start of this year, forming a so-called "good bank" that continues its healthy businesses and a "bad bank" management company to run down the remaining assets.

© 2010 AFP

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