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ClimateNE & Climate Change Schools Project support the move to a low-carbon, resilient economy and help businesses avoid risk and realise commercial opportunities. Posts by Jen Atkinson, Krista McKinzey and Harriet Thew » On the face of it today's results from Northern Rock are very much in line with what we expected.
Although apparently incongruous, it is not surprising that Northern Rock Asset Management - the 'bad bank' where the most toxic of its loans are deposited - has raced into the black ahead of the 'good bank' which made a relatively small loss of ã143m.
This strong performance from the asset management business perhaps suggests that the quality of loans on its books are not as bad as first feared, even though there has not been a fall in the number of customers in arrears,
But it is the 'good bank' which should attrack most of our attention for it is this part of the business that represents the future of the business in the North East.
That it made a loss today is not surprising. It is primarily concerned with savings and deposits rather than lending and, allied to its requirement to have a high level of cash in the business following its troubled past, this means it is not briniging in the type of earnings which will yield a profit yet.
Nonetheless, its performance is encouraging and there is no doubt that the taxpayer will ultimately make a profit when the Rock is sold back into the private sector. The big question remains when will this happen and what role will it play?
Today's figures show that this business is a relatively small player - and its new reduced size explains the recently announced job losses at the Rock where fewer people are required to do the level of work the business is engaged in.
In the current context of the government criticising the banks for failing to lend to business and warnings about a further need to shake up the sector with more competition, it is clear that the Rock can only play a very limited part in this in its current shape and size.
If the government is serious about reforming the banking sector, it should look at the Rock as an opportunity to deliver this change by growing the business to a much more meaningful size before selling it back into the private sector.
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