Taxpayer-owned bank boss takes home £1.3m despite waiving bonus

THE head of taxpayer-owned Northern Rock was paid £1.3 million last year – more than his last pay package at Barclays despite waiving his bonus in 2009.

Gary Hoffman, poached to become Northern's chief executive in 2008, saw his basic 700,000 salary last year boosted by pension payments and the second tranche of a 1.2m compensation package for incentives lost when he left Barclays.

The pay package compares with the 1.1m he got from Barclays in 2007 and the 645,000 received from Northern Rock in 2008, when he worked for the bank for just three months.

Hoffman's pay package, detailed in Northern's annual report, makes him one of Britain's best-paid civil servants, and comes amid continuing controversy over banking remuneration and after a 383m loss made by the bank last year.

The bank was demerged between so-called "good" and "bad" banks in January, but the report was of the group before the split.

The report showed Northern paid its directors 2.4m in 2009, down from 4.4m the previous year, due to the departure of finance director Ann Godbehere and a reduced salary for chairman Ron Sandler.

Hoffman is chief executive of both the new mortgage and savings unit of Northern Rock, which the government hopes to sell, and Northern Rock Asset Management.

Northern said the bank was working on a new long-term incentive scheme for Hoffman, linked to the performance of both the "good" and the "bad" banks.

That scheme would pay out only when the bank was profitable or back in private hands again. The bank gave no details.

Revelations about Hoffman's latest pay is likely to fuel the continuing furore over banking remuneration in the aftermath of the sector's near-collapse and the subsequent deepest recession since the Second World War.

City analysts say the issue is likely to remain a political football ahead of the election, with Labour's recent 50 per cent tax on bank bonuses of 25,000 and more, and a new higher 50 per cent rate of tax for high earners, raising the temperature of the debate.

Royal Bank of Scotland boss Stephen Hester recently said retaining top staff due to financial constraints was one of his toughest jobs.