Northern Rock loses deputy chairman

Wednesday 27th August 2008

Northern Rock today revealed its deputy chairman was leaving the company.

Stephen Hester, currently non-executive deputy chairman, will step down from the Board on October 1st 2008.

The role was only introduced in February as a part of the nationalisation plans for the Novocastrian mortgage lender and Mr Hester's departure will form part of a shake-up at the top of firm.

Ron Sandler – brought in by the government to take charge of Northern Rock – will give up his full-time executive role to become non-executive chairman.

Gary Hoffman – currently at Barclays – will become the new chief executive.

Mr Sandler said: “We are grateful to Stephen for his substantial contribution to the board in the vital initial phase of public ownership.

"We have accomplished the key stages of adopting a restructuring plan, advancing its implementation, recruiting new management and board members and ensuring that the company’s capitalisation is put on a firm footing."

Mr Hester will now "focus on other business interests".

The news comes it was revealed Northern Rock's mortgage book is coming under greater pressure with higher than average arrears levels.

Data from Standard & Poor's show the number of borrowers falling more than 90 days behind on their mortgage repayments rose faster than at any UK bank.

This is the result of Northern Rock's plan to reduce its mortgage book by encouraging borrowers at the end of fixed-rate deals to remortgage elsewhere.

However, borrowers with low levels of equity behind them – previously taking high loan-to-value (LTV) mortgages – and those with poor credit records have been forced to stay with the Rock as no other lender will have them.

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