The state-owned bank Northern Rock shrank its losses in 2009, and announced it had made "good progress".

The bank also announced on bonuses that "reflecting achievement against the agreed objectives, including a level of loss that was over £500 million better than the agreed target, the company will make payments under this scheme totalling £14.9 million, including £1.5 million in respect of the UK Bank Payroll Tax".

Chief executive Gary Hoffman had waived his bonus entitlement however.

Today the mortgage lender said it lost £257.4 million last year, compared with £1.36 billion in 2008.

Mr Hoffman added: "We made good progress in 2009, and finished the year significantly ahead of the agreed target. We delivered an improved financial performance whilst fundamentally restructuring the business.

"A combination of stronger net interest income, together with a 32 per cent cost reduction, helped drive an improved financial performance in 2009. The loss of £257 million was better than expected and a significant improvement from a loss of £1.4 billion in 2008."

Earlier this year Northern Rock split into two – a 'good bank and bad bank' - with Northern Rock (Asset Management) holding the majority of the bank's bad debts, while Northern Rock PLC will hold savers' money. The latter will eventually be sold.

"The restructured business is now well placed to move forward in 2010. We remain committed to delivering the highest standards of service to all our customers, including those customers facing financial difficulty," Mr Hoffman added.
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