Northern Rock to pay bonuses

Northern Rock executives said the bank, which was nationalised two years ago, had turned a corner, with arrears stabilising in the fourth quarter, but warned loan impairments would stay high in 2010, despite coming off the peak in 2009.

The bank, Britain's first major victim of the credit crunch, was one of the country's most aggressive lenders at its peak, with products including the infamous Together mortgage, which gave borrowers more than their home was worth and is still driving arrears and the bulk of repossessions.

"We still think the recovery is going to be uncertain and will take some time," Chief Executive Gary Hoffman said.

Northern Rock, in which the government has invested billions in taxpayers' pounds, has not been immune to the public's outrage over bank bosses' pay. Hoffman said on Wednesday he would follow other UK bank executives and waive his 700,000 pound bonus.

He will pay bonuses to other employees after the bank hit its lending and other targets.

In total, bonuses will cost the bank 14.9 million pounds, including a 1.5 million pound bonus tax payment -- a fraction of payments at rivals with investment banking arms.

Employees at the former building society, who are paid an average salary of 20,000 to 25,000 pounds a year, will receive an average bonus of 3,000 pounds. Thirty-two staff will receive bonuses of more than 25,000 pounds.

In 2008, Northern Rock did not pay senior management bonuses and gave what it said were "modest" bonuses to other staff. It gave no numbers.

IMPAIRMENTS PEAK