Belfast Telegraph

Northern Bank to close more branches as losses hit £217m

By Margaret Canning

Northern Bank is nursing bad debts of almost £274m thanks to the plummeting value of land set aside for homes which were never built, its boss said.

Chief executive Gerry Mallon said 2011 had been a tougher year than anticipated and forecast more of the same as the bank revealed a loss of nearly £217m in its full year results.

He said a pace of around 60 redundancies every year would continue with more branch closures likely on top of four already announced for this year.

"2012 will be another tough year with slow economic growth for Northern Ireland which inevitably impacts on us," he said.

An increased operating profit of £57.1m - up from £47.7m in 2010 - was obliterated by the bad debt provision, leaving the bank with a loss of £216.8m.

Mr Mallon said the impairment charges, which were close to double on 2010's £142.9m, were down to the commercial property market, in particular the falling value of land banks which had nosedived by up to 90% on their 2007 peak.

"The more speculative and the closer your get to land bank then the bigger the loss," the bank chief said. "The further you get away from Belfast, the bigger the write-down."

However, personal lending was up by 2% on 2010, which Mr Mallon said was due to improved mortgage products.

Mr Mallon said the bank aimed to improve underlying performance and make efficiencies with staff numbers at around 1,600 from just under 2,500 in 2005.

In the last three years, staff had been taking redundancy at the rate of around 60 a year, he said. "I would see that continuing over the next few years."

But he denied there were any specific targets or numbers, adding: "We don't at the minute see any need for compulsory redundancies but you can't rule it out."

Mr Mallon said a programme of branch closures would also continue, on top of branch closures in Portstewart, Portrush, Donaghadee and Ballyholme already announced for 2012.

However Mr Mallon, who disclosed he has not received a bonus since 2008, said the overall health of the bank was good, adding: "We have a very strong franchise in Northern Ireland with good long-term prospects."