|
|
Northern Rock Announce £100million Hole in Pension Scheme
|
Northern Rock have added to their growing list of troubles by announcing that the bank’s employee pension scheme has a £100million hole in it.
The news came after a conservative revaluation of this scheme, which trustees deemed necessary to reflect “the significant deterioration in the financial position of Northern Rock, which necessarily implies a more pessimistic view of the company’s ability to support the scheme in future”. Ultimately, the trustees were worried that Northern Rock’s unstable financial position would prevent them from being able to continue making payments into the fund.
The news was broken to employees in a letter, although the bank was keen to point out that the revised scheme remains a draft and is yet to be “agreed and finalised in formal discussions with the company”.
However, the news wasn’t all bad, as the scheme’s trustees also revealed that they had taken all of the scheme’s assets out of risky shares and invested them into government gilts, they said: "As a result, the final salary section's assets are very well protected from the possibility of falling stock market values".
News of the scheme’s deficit may dissuade potential buyers from purchasing Northern Rock, as it’s estimated that the pension scheme alone may cost around £200million to completely wind up.
The bank has also divulged details of a deal with the JP Morgan, an American investment bank who have bought Northern Rock’s £2.2billion home equity release mortgage portfolio. This stake represents around 2% of Northern Rock’s total assets and will allow the bank to pay back some of its £26billion debt to the Bank of England. Chief executive Andy Kuipers said that this move, "illustrates the quality of our assets, which has enabled us to achieve a sale at a premium despite continuing difficult financial markets, and will allow the company to reduce its debt to the Bank of England".
Sources:
Times
Guardian
This article is copyright protected and is not for republishing
|
|
|
del.icio.us
digg
Furl
Reddit
YahooMyWeb
blogmarks