LONDON (AFP) — Nationalised British bank Northern Rock reported on Tuesday a net loss of 592 million pounds (746 million euros, 1.16 billion dollars) in the first half as it repaid a chunk of a large government loan.
The loss figure from the bank, which was rescued after falling to the subprime crisis, compared with profit after tax of 188 million pounds in the first six months of 2007.
"While the losses reported today are likely to continue as the restructuring proceeds and as the credit environment remains difficult, I am confident that the foundations have been well laid for recovery and return in due course to private ownership," said Northern Rock chairman Ron Sandler.
Northern Rock, once Britain's fifth-biggest home loan provider, was taken into public ownership by the government in February after it failed to find a suitable buyer from the private sector.
The lender, based in Newcastle in northeastern England, ran into severe funding problems last year as banks tightened lending criteria amid uncertainty over exposure to the collapsed US subprime home loan sector.
The bank was ravaged by the global credit crunch, which forced it to request emergency funding from the Bank of England last September -- sparking the first run on a British bank for more than a century.
Northern Rock said on Tuesday that since the beginning of 2008 it had repaid 9.4 billion pounds of money leant to it by the British government.
"Net borrowings provided by the Bank of England have reduced ... to 17.5 billion pounds, compared with 26.9 billion pounds at the end of December 2007 and are ahead of the business plan," Northern Rock said in the earnings statement.
Sandler said he envisaged that the government would be repaid in full before the end of 2010.
The bank meanwhile posted a pretax loss of 585 million pounds in the six months to June 30.
Northern Rock had last week said it would axe 1,300 jobs as part of a previously-announced cost cutting drive aimed at shedding a total of 2,000 positions, or a third of its workforce, by 2011.
In July, Northern Rock appointed the vice chairman of British bank Barclays, Gary Hoffman, as its new chief executive.
Hoffman, 47, will leave the Barclays board at the end of August and take up his new job on October 1, when he will replace Northern Rock's current chief executive Andy Kuipers.
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