No Golden Handshake For Shamed Northern Rock Boss

by Stewart Douglas

Story link: No Golden Handshake For Shamed Northern Rock Boss

Disgraced former Northern Rock chairman Matt Ridley will no longer receive a gloden handshake after he leaves office, according to media reports today, despite initial projections he may benefit from his departure.

The former head of the troubled lender announced his resignation towards the end of last week, after his previous attempt to resign at the height of the bank’s problems was rejected in order to allow him to plead the bank’s case in front of parliament.

Until today it had been thought that Mr Ridley, salaried at £315,000 a year, would receive a so-called golden handshake on his departure from office which could easily run into the millions of pounds.  However after much media uproar it was suggested today that it would be unlikely that Ridely will receive any compensation in light of his resignation from the bank.

Northern Rock has experienced some of the worst liquidity problems at a British bank for over 150 years, borrowing from its counterparts to increase its exposure in the now defunct sub-prime mortgage lending market in the US.  Upon the collapse of the sector, the Northern Rock was left with a substantial liquidity problem as repayments on its inter-bank lending fell due prior to any return from defaulted loans stateside.

Many analysts within the banking sector have criticised Northern Rock during the last few weeks, citing poor financial management as the main reason for the shortfall in credit leading to the public panic withdrawals that saw severe queues forming outside bank branches nationwide.

As a result Mr Ridley faced a grilling in parliament last week over his role in the fiasco which demanded emergency support from the Bank of England to prevent the lender from folding.

Mr Ridley is to be succeded by former Standard Chartered and BUPA boss Bryan Sanderson, pending approval by the Financial Services Authority.