Northern Rock in credit cards plan
Nationalised Northern Rock plans to start offering credit cards and personal loans again as it readies itself for sale to the private sector, the group has revealed.
The lender - the so-called good side formed when the bank split in two earlier this year - said it has the platform to offer a greater variety of retail banking services in a "safe way".
News of the move came as the first set of results were released since the January 1 demerger - which created a mortgage and savings bank called Northern Rock plc and hived off the bank's more toxic loans into Northern Rock Asset Management.
Half-year figures showed Northern Rock AM returned to profit in the first six months amid a fall in bad debts to £277.6 million. It reported underlying pre-tax profits of £167.3 million in the six months to June 30 compared with a loss of £243.9 million a year earlier.
But its sister firm reported an underlying interim loss of £140 million as it was hit by rising costs. The "good" Northern Rock also lost nearly £2 billion of retail savings after the removal of the Government's guarantee in May.
Deposits dropped to £17.6 billion from £19.5 billion at the start of the year, although Northern Rock also said the savings balance fell as it withdrew more generous savings products and closed its offshore savings operations in Guernsey.
It repaid £300 million of state debts, but still owes a mammoth £22.5 billion, and repayment will be a slow and gradual process as mortgage accounts are redeemed.
Chief executive Gary Hoffman said the bank is moving in the right direction for a sale to the private sector but stressed this would happen "only when conditions are right".
He said: "We have got a business that is well capitalised and extremely liquid - a good platform for growth. In due course we could think about expanding the product range again."
This could include credit cards and unsecured personal loans, as well as an expansion of its current account offering. Northern Rock pulled its consumer loans and credit cards after the bank's collapse amid the credit crunch.