Royal Bank of Scotland, Northern Rock and Lloyds Banking Group - Treasury Contents


Written evidence submitted by Northern Rock

EXECUTIVE SUMMARY—NORTHERN ROCK CONTINUES TO MAKE GOOD PROGRESS

Business Plan

  On 1 January 2010 Northern Rock successfully completed a legal and capital restructure to create two separate companies:

    —  Northern Rock plc—a new savings and mortgage bank that holds and services customer savings accounts (currently £19 billion) and some mortgage accounts (approximately £10 billion). The bank is authorised as a deposit taker by the FSA and offers new savings and mortgage products.

    —  Northern Rock (Asset Management) plc—the existing company renamed, which holds the balance of the existing residential mortgage book (around £50 billion). This company is the borrower under the Government loan. It is regulated by the FSA as a mortgage provider, not a deposit taker. Therefore it has a lower regulatory capital requirement. It will not offer any new mortgage lending.

  The restructure has delivered a capital efficient solution, in taxpayers' best interests.

Competition

    —  Following a significant contraction in the number of active participants and the volume of available loans in the mortgage market over the last two years, the restructure enables the new bank to increase its new mortgage lending, sustaining competition in the UK and supporting mortgage market capacity.

    —  Northern Rock has been operating under self imposed competitive restrictions since 2008, and remains committed to not taking unfair advantage of Government support. Consequently some revised measures have been agreed with the European Commission as part of the State Aid approval process.

Performance in 2009

    —  Operational performance continues to benefit from a strengthened Board and management, and a significantly improved risk and control environment.

    —  Northern Rock's financial performance improved through 2009, reflecting higher net interest income, good control of costs and impairment charges lower than forecast.

    —  Northern Rock remains committed to providing its people with a supportive and rewarding place to work.

Customers

    —  For our customers, it is business as usual and we remain committed to offering a high level of service to all.

    —  Existing terms and conditions remain unchanged for mortgage customers in both Northern Rock plc and Northern Rock (Asset Management) plc.

    —  This restructure has been described as the creation of a "good" bank and a "bad" bank. This is inaccurate and potentially distressing to our customers. The vast majority of the mortgages in Northern Rock (Asset Management), the so called "bad bank", are not in arrears, with over 90% fully performing.

    —  Our substantial debt management investment programme has allowed more than 1,700 customers to remain in their homes as a result of Northern Rock's innovative rescue solutions. The number of properties in possession has fallen from over 4,000 at its peak to around 2,000 at the end of 2009.

    —  Repossession remains a last resort—both companies will continue to offer all customers access to debt management facilities should they experience financial difficulty.

1.  INTRODUCTION

  1.1 Northern Rock welcomes the opportunity to provide an update to the Treasury Select Committee on its progress during 2009. This memorandum covers the period since Northern Rock's appearance in front of The Treasury Select Committee in November 2008.

  1.2 Northern Rock has continued to adopt a professional and structured approach to the regular release of financial and other business performance information in line with the Company's commitments to accountability and transparency whilst in Temporary Public Ownership. The material included here is based on information which has already been released publicly.

  1.3 In this written submission, Northern Rock updates the Committee on the following areas:

    —  Legal and Capital Restructure: Background to the revision of the Company's strategy and key features of the revised plan, including agreement to State Aid and overview of new companies;

    —  Northern Rock's Performance in 2009: Financial and Operational performance; and

    —  Governance: Board and Executive Structures of the new companies.

2. LEGAL AND CAPITAL RESTRUCTURE

  2.1 A key objective of the Company's original business plan, announced in March 2008, was to repay the Government loan, primarily through a programme of accelerated mortgage redemptions. This was achieved by actively encouraging existing customers to remortgage to other lenders. During 2008 this policy was very effective and enabled the Company to reduce the Government loan ahead of its plan.

  2.2 The Company embarked on a review of its strategy in the autumn of 2008 in response to the significant deterioration in the external environment. The plan review specifically set out to address the risk of higher capital requirements as loan losses increased. The plan also addressed how Northern Rock could support increased mortgage market capacity following a significant contraction in mortgage market supply during 2008.

  2.3 In February 2009, Northern Rock announced that it had agreed a revised business plan with the Government. The key features of the revised plan were:

    —  slowing down the rate of mortgage redemptions;

    —  offering up to £14 billion of new mortgage lending in 2009-10;

    —  changing the repayment profile of the Government loan to reflect the new mortgage lending and slower redemptions; and

    —  implementing a legal and capital restructure of the Company, designed to maximise value for the taxpayer and facilitate the new mortgage lending.

  2.4 Through 2009, the Company worked closely with the Government and the Financial Services Authority (FSA) in preparation for the legal and capital restructure, which is core to its business plan. This included supporting the Government in the submission of a revised State Aid application to the European Commission (EC) as well as working with the FSA to demonstrate the robustness of the Companies' future business plan.

  2.5 In October 2009, the EC announced that it had approved the Government's State Aid package for Northern Rock. This enabled the plan to restructure the business to proceed.

  2.6 The legal and capital restructure completed on 1 January 2010, resulting in two separate companies.

    —  Northern Rock plc—a new savings and mortgage bank that holds and services approximately £19 billion of customer savings accounts and approximately £10 billion of mortgage accounts. The bank is authorised as a deposit taker by the FSA and will offer new savings products. It will also offer new mortgage lending to support the Government's objective of increasing mortgage supply and sustaining a competitive market. Northern Rock plc also holds some wholesale deposits.

    —  Northern Rock (Asset Management) plc—the existing Company renamed which holds approximately £50 billion of residential mortgages and a portfolio of personal unsecured loan accounts of around £4.5 billion. It is regulated by the FSA as a mortgage provider, not a deposit taking bank. This enables the Company to hold a lower amount of capital than would otherwise have been the case. 90% of the mortgages held by Northern Rock (Asset Management) plc are fully performing and are not in arrears. This company cannot, therefore, be accurately described as a "bad" bank. The portfolio includes the company's interest in those mortgages allocated to the Granite securitisation and covered bond programmes. It will not offer any new mortgage lending.

  Northern Rock (Asset Management) plc remains the borrower in respect of the Government loan and Northern Rock's existing outstanding wholesale funding and subordinated debt.

  2.7 Both companies remain in Government ownership following completion of the restructure.

  They are well capitalised, and have sufficient liquidity to fulfil their anticipated obligations.

  2.8 Following the legal and capital restructure, all staff are employed by the new company, Northern Rock plc, who will provide administrative and other services to Northern Rock (Asset Management) plc under service level agreements which will be monitored by the independent Executive and Board structures of each entity. Options for full separation will be evaluated and implemented throughout the course of 2010.

Competition—Supporting the Mortgage Market

  2.9 There has been a significant contraction in both the volume of available mortgages and the number of active market participants as a result of the financial crisis. The Government loan increased by approximately £8 billion to £23 billion on completion of the restructure. This allowed additional cash resources to be provided by Northern Rock (Asset Management) plc to Northern Rock plc in connection with the transfer of its deposit liabilities to the new bank. This will enable Northern Rock plc to continue to increase mortgage lending, supporting mortgage market capacity in a time of constrained market competition.

  2.10 Northern Rock has always been mindful of the need to avoid competitive distortion while in receipt of State Aid. As a result the existing company has operated under self-imposed restrictions in the form of a Competitive Framework since early 2008. The Government has offered a number of compensatory measures, which have been agreed with the EC in order to continue to avoid competitive distortion in the market.

  2.11 These measures have replaced the existing Competitive Framework commitments following the restructure. The measures that Northern Rock plc and Northern Rock (Asset Management) plc have implemented as part of the restructuring include:

    —  Northern Rock plc will limit new lending volumes to £4 billion in 2009, £9 billion in 2010 and £8 billion in 2011.

    —  Northern Rock plc will maintain retail deposit balances across the UK, Ireland and Guernsey at or below £20 billion until the end of 2011.

    —  Northern Rock plc will not rank in the top three of Moneyfacts mortgage categories for two, three or five year fixed or variable mortgages before the end of 2011 (excluding mortgages with a Loan-To-Value (LTV) ratio of greater than 80% and products for first time buyers).

    —  Northern Rock (Asset Management) plc will continue to hold all existing subordinated debt and, where it is contractually able, will not pay principal or coupons on these instruments while it is in receipt of State Aid.

Capital

  2.12 As a UK bank, the amount of capital (or money) we are required to maintain is governed by the FSA. If Northern Rock had remained as it was, we would be required to hold a significant amount of additional capital to meet the FSA's regulatory requirements.

  2.13 By restructuring into two companies, the total amount of capital required will be within the £3 billion level previously agreed by the Government—essentially because Northern Rock (Asset Management) plc will not hold any retail deposits and will be regulated with a lower regulatory capital requirement than a deposit taking bank.

  2.14 At the Transfer Date, HM Treasury holds (through its nominee) the paid up share capital of the new bank, Northern Rock plc, of £1.4 billion (1.4 billion ordinary shares of £1 each).

  2.15 HM Treasury has also committed to ensure that Northern Rock (Asset Management) plc meets its regulatory capital requirements by undertaking to provide additional regulatory capital of up to £1.6 billion, but only if such capital is required.

  2.16 Northern Rock plc and Northern Rock (Asset Management) plc are both in receipt of State Aid following the restructure. The EC has approved the aid package following an extensive and rigorous review process under European State Aid rules.

Customers

  2.17 For Northern Rock customers it is business as usual and they need take no action following completion of the restructure. We are in the process of writing to all our customers to keep them informed of progress.

  2.18 A significant proportion, around £50 billion of mortgage customers, remain with the existing company, now called Northern Rock (Asset Management) plc. The portfolio includes the Company's residual interest in those mortgages which have been sold to the Granite securitisation programme and the Northern Rock covered bond programme (totalling approximately £38 billion).

  2.19 The restructure has been likened by some to the creation of a "good bank" (Northern Rock plc) and a "bad bank" (Northern Rock (Asset Management) plc). 90% of the mortgages held by Northern Rock (Asset Management) are fully performing and are not in arrears, and this company would not, therefore, be accurately described as a "bad" bank. This term is not only inaccurate but more importantly could be distressing to our customers and detrimental to other stakeholders of Northern Rock. This is something we are keen to avoid.

  2.20 While Northern Rock (Asset Management) plc will no longer undertake new lending, customers will be able to continue operating their mortgages as they do now. This means that they should continue to make payments in the normal way and will be able to utilise flexible features (for example, redrawing previous overpayments) as before.

  2.21 They will also be allowed to port their mortgage to a new property subject to the usual underwriting criteria and repay their mortgage over the unexpired term of the product. Should they wish to move their mortgage to another provider they will be able to do so. Existing terms and conditions will remain unchanged for mortgage customers in both Northern Rock plc and Northern Rock (Asset Management) plc.

  2.22 Our primary concern remains the fair treatment of all customers at all times and in all circumstances.

Government Guarantee

  2.23 The Government guarantee of retail savings transferred to Northern Rock plc remains in place. Given the Company's good progress and the new bank's strong capital and liquidity position, release of the guarantee is being reviewed by HM Treasury and the FSA.

  2.24 Any decision to release the guarantee is subject to a minimum three-month notice period. Fixed rate bonds will retain the guarantee for the existing term of the product. In the event that the Government guarantee is lifted, Northern Rock UK savings customers will benefit from the cover provided by the Financial Services Compensation Scheme.

  2.25 Guarantee removal would be a positive sign of market normalisation as well as being an important step in the rehabilitation of Northern Rock

3. NORTHERN ROCK'S PERFORMANCE IN 2009

  3.1 Northern Rock has committed to provide regular and transparent reporting. Northern Rock releases detailed financial statements for the half year and full year, supported by quarterly trading statements. The information included below relates to the financial performance of the company prior to completion of the legal and capital restructure, now known as Northern Rock (Asset Management) plc.

Financial Performance

  3.2 Northern Rock has demonstrated consistent improvement in its financial performance during 2009. Although it has remained loss making, this improvement has been driven by higher net interest income, tight control of costs and by a better than expected loan loss impairment charge. This reflects the operational decisions taken in the Company including the substantial investment in debt management activities.

  3.3 The Company reported a reduced underlying loss before tax of £270 million in the six months to 30 June 2009, compared to an underlying loss of £443 million in the first half of 2008. While the Company remains loss making, it expects to confirm this improving trend in its financial performance when it releases its full year 2009 results during 2010.

  3.4 Following the EC's approval of the Government's State Aid package the Company will recognise a rebate relating to the cost of the Government loan and guarantee costs of £445million which will be reflected in the full year statutory results.

Lending

  3.5 Gross Mortgage lending accelerated during the second half of the year with the Company achieving its 2009 lending target of £4 billion. The quality of this lending remains high, with an average LTV ratio of new lending at 55%. The Company continues to ensure that all its lending is done on a responsible basis and is carefully underwritten with affordability for customers a key consideration.

Arrears

  3.6 Arrears increased during 2009, reflecting broader economic conditions and the impact these have had on Northern Rock's mortgage book with arrears over three months of 4.11% at 30 September 2009. Arrears have stabilised during the last quarter of 2009, reflecting the investment in debt management capabilities and improved affordability levels as a result of low interest rates.

Debt Management

  3.7 In its submission of November 2008, Northern Rock reported on the steps it was taking to develop and strengthen its approach to debt management.

  3.8 The Company has invested significantly in its debt management function, more than doubling the number of staff within debt management operations in the last 18 months, with a primary focus on increasing the level of customer contact. Customer engagement remains key to maximising dialogue and ensuring that realistic and sustainable payment arrangements can be achieved.

  3.9 We actively engaged in the design and improvement of Government rescue schemes in early 2009 and were one of the first lenders to operate the Government's Homeowner Mortgage Support Scheme.

  3.10 Additionally, we have made good progress in developing our own innovative mortgage rescue solutions which have to date successfully assisted more than 1,700 customers facing financial difficulty to stay in their homes.

  3.11 This complements our specific commitment not to take possession of a property until at least six months after the first arrears event. On average we work with customers for a significantly longer period of time than this. In all cases, repossession remains a last resort.

  3.12 The number of properties in possession has fallen from over 4,000 at its peak to around 2,000 at the end of 2009.

  3.13 In November 2009 we hosted our second annual roundtable of the debt advice community at which we received very positive feedback, notably from a number of organisations which were previously critical of our approach to debt management.

Colleague Engagement and Performance Management

  3.14 Northern Rock is committed to providing a supportive and rewarding place to work for all its people. This would be its objective under any circumstances, but is particularly so given the Company's recent difficult past, where colleagues have been working under significant pressure, and have faced a great deal of uncertainty while often being under an intense media spotlight.

  3.15 During 2009, the Company has implemented an enhanced performance management system to ensure that individual performance is managed and rewarded appropriately, while mindful of external perceptions towards bankers' remuneration. The Company believes it is essential to have in place a framework which allows objectives to be set and properly measured, with appropriate development planning and coaching support in place.

  3.16 The Company subscribes to the principle that there should be no rewards for failure. Its incentive scheme complies with FSA requirements, including deferral and clawback provisions within it. Additionally, there were no pay rises for or bonuses paid to Executive or senior management during 2009, beyond contractual entitlement.

  3.17 The Company recently conducted an employee engagement survey, which was completed by over 90% of all colleagues, a substantial increase on 2008. Almost nine out of ten respondents stated that they enjoy working at Northern Rock and feel they make a positive contribution to the Company, and while clearly some uncertainties remain as to the Company's future, the overall results from this survey were encouraging.

Community

  3.18 Northern Rock has been a substantial contributor to the wider community over the years both through the Northern Rock Foundation and through direct staff activity. During 2009 Northern Rock has engaged closely with debt advice agencies as part of its debt management activities as well as supporting its staff in a wide range of broader community activities.

  3.19 Going forward, Northern Rock's community strategy is being refocused towards being known for helping communities in financial difficulty, utilising the skills inherent within the organisation. In 2010 and beyond, Northern Rock will actively encourage its colleagues to participate in community activities in support of this objective. We are currently engaging with the Northern Rock Foundation and more widely to establish the precise nature of this programme.

  3.20 In line with the commitment made when Northern Rock was taken into temporary public ownership, the Company has donated £15 million to the Northern Rock Foundation during 2009. Such donations enable the Foundation to support community and charitable causes mainly, but not exclusively, in the North East of England and Cumbria. In line with this commitment a further £15 million will be donated to the Northern Rock Foundation in 2010.

4. GOVERNANCE

  4.1 The Board governance structures of Northern Rock plc and Northern Rock (Asset Management) plc are set out in Appendix 1 to this document.

  4.2 Governance arrangements for the two companies have been agreed by the Government as shareholder and the FSA as regulator. Each company has its own Board and Executive Committee.

  4.3 To facilitate the full separation of the two companies now that the legal and capital restructure has completed, Gary Hoffman has been asked by the Government and approved by the FSA to act as Chief Executive of both companies on completion of the restructure. There is no change in Gary Hoffman's remuneration arrangements as a result of taking the role of Co-CEO. The remainder of each company's Boards will be independent of each other with robust procedures and service level agreements in place to manage the arms length relationship that will exist between the two companies.

  4.4 Ron Sandler has been appointed Non-Executive Chairman of Northern Rock plc and Richard Pym has been appointed as Non-Executive Chairman of Northern Rock (Asset Management) plc. Richard brings expertise and experience from Bradford and Bingley, a similar mortgage company, where he will continue in his role as Chairman.

  4.5 With effect from 1 January 2010, Ron Sandler's remuneration will reduce from £350k to £250k when he takes on the chairmanship of Northern Rock plc. Richard Pym will receive a total of £250k for chairing both Bradford and Bingley and Northern Rock (Asset Management) plc.

  4.6 All other remuneration arrangements applicable to the members of both new Boards will be disclosed separately at the time of the respective annual report and accounts.

  4.7 Biographical detail of Board appointments for Northern Rock plc and Northern Rock (Asset Management) plc is included in Appendix 2. These appointments are designed to provide strong Boards for both companies, harnessing significant retail banking, financial and operational experience to ensure each company can meet its objectives and, in turn, deliver value for taxpayers.

5. SUMMARY: LOOKING FORWARD

  5.1 Northern Rock (Asset Management) plc will continue to evaluate options to maximise value to taxpayers as shareholder and provider of financial support, while continuing to provide a high level of service to its customers. The Government has asked us to explore options for how Northern Rock (Asset Management) and Bradford & Bingley may be able to work together cooperatively, in the future, in the best interests of taxpayers. At this point it is too early to speculate on what this might mean in detail.

  5.2 Northern Rock plc, a highly liquid and well capitalised bank, will continue to offer new mortgage and savings products, supporting market capacity. The Company offers competitive retail savings products and provides responsible, affordable lending on commercial terms in taxpayers' best interests. The company aims to provide high levels of customer service at all times, differentiating ourselves by doing what we say, and delivering products based on need as well as adopting a proactive approach to dealing with customers in financial difficulty.

  5.3 Northern Rock's operational and financial performance continued to improve during 2009 with completion of the legal and capital restructure a key milestone in building a stronger future.

  5.4 As well as maximising capital efficiency and delivering best value for the taxpayer, this enables Northern Rock plc to support the markets in which it operates, and ultimately prepares the Company for a return to the private sector.

APPENDIX 1

Northern Rock (Asset Management) plc Board Level Governance


Northern Rock plc Board Level Governance


APPENDIX 2

BOARD BIOGRAPHIES—NORTHERN ROCK PLC

  Ron Sandler, Non-Executive Chairman, was appointed as Non-Executive Chairman of the existing company on 1 October 2008 having previously joined the Board as Executive Chairman on 22 February 2008. He was Chief Executive of Lloyds of London from 1995 to 1999, and was subsequently Chief Operating Officer of NatWest Group. He is Chairman of Pearl Group, Paternoster Ltd and Ironshore Inc.

  Gary Hoffman, Chief Executive Officer, was appointed to the Board of the existing company on 1 October 2008. Previously Group Vice-Chairman and Executive Director of Barclays plc, he joined Barclays in 1982 as a graduate in economics from Cambridge University. He is a Non-Executive Director of Visa Europe and Trinity Mirror plc and is a Trustee of the Charities Aid Foundation. He is also Vice-Chairman of Coventry City Football Club.

  Laurie Adams joins the Board as a Non-Executive Director. Laurie was appointed to the Board of the existing company as a Non-Executive Director on 29 November 2007. He is a Non-Executive Director of Novae Group plc and Parex Bank, as the EBRD nominee. He was formerly a Non-Executive Director of Siblu Holdings Limited (formerly Haven Europe Limited) and Managing Director and Global Head of Legal and Compliance of the Investment Banking Wholesale Division at ABN Amro Bank.

  Richard Coates joins the Board as a Non-Executive Director, having been appointed to the Board of the existing company as a Non-Executive Director on 5 August 2008. Richard was Managing Director of Baseline Capital Limited from 2003 to 2008, a specialist mortgage data analysis and modelling organisation. For the previous 30 years he was at KPMG UK, rising through various appointments to become Senior Partner, UK Head of Financial Services. He is a Non-Executive Director for Police Mutual Assurance Society Limited.

  Mike Fairey was appointed to the Board as a Non-Executive Director on 1 January 2010. Mike was the Deputy Group Chief Executive of Lloyds TSB Group PLC from 1998 until his retirement in June 2008. Mike is also chairman of the Lloyds TSB pension funds, a Non-Executive Director of the Energy Saving Trust and Vertex Data Sciences and president of the British Quality Foundation.

  Rick Hunkin, Chief Risk Officer of Northern Rock since 1 September 2008, has joined the Board as an Executive Director. Rick has nearly 30 years experience in retail banking and joined the existing company from GE Money UK Home Lending, where he was responsible for all aspects of risk management. Prior to this, he was an Executive Director at C&G plc. Since arriving at Northern Rock, Rick has been instrumental in establishing an independent Risk function, which has been central to the strengthening of Northern Rock's risk and control environment. In his role, Rick is responsible for Risk, Compliance, Legal and Company Secretariat.

  Mark Pain was appointed to the Board as a Non-Executive Director on 1 January 2010. He is a Non-Executive Director of Punch Taverns Plc, Johnston Press Plc and LSL Property Services Plc, and a trustee at Somerset House. Mark was previously Group Finance Director of Barratt Developments Plc, and held a number of senior Executive and Board positions at Abbey National Plc including Group Finance Director and Group Sales Director.

  Mary Phibbs was appointed to the Board as a Non-Executive Director on 1 January 2010. She was previously Deputy Group Chief Credit Officer for Standard Chartered Bank based in London. In a 30 year career in Banking and Finance she has held a variety of senior Executive risk and business management positions with the Australia and New Zealand Banking Group Limited, the National Australia Bank Limited, Bankers Trust Australia Limited and the Commonwealth Bank Group. She is a Chartered Accountant and alumni of PWC and KPMG in London and Sydney.

BOARD BIOGRAPHIES—NORTHERN ROCK (ASSET MANAGEMENT) PLC

  Richard Pym, Non-Executive Chairman, joined the Board of Bradford & Bingley plc as Chief Executive in August 2008, and was appointed Executive Chairman in November 2008 following the company being taken into public ownership, reverting to Non-Executive Chairman status on 1 July 2009. He was Group Chief Executive of Alliance & Leicester plc from 2002 to 2007. Richard has held a number of financial and general management roles during his career, including The Burton Group plc, BAT Industries plc, British Gas and Thomson McLintock & Co. He was formerly a Vice President of the British Bankers Association, a Non-Executive Director of Selfridges plc, and Chairman of Halfords Group plc. Richard is a Fellow of the Institute of Chartered Accountants in England and Wales, a Non-Executive Director of Old Mutual plc and Non-Executive Chairman of BrightHouse Group Ltd.

  Gary Hoffman—as above

  Kent Atkinson remains on the Board as Non-Executive Director. Kent was appointed to the Board of the company as a Non-Executive Director on 5 August 2008. Kent was previously Group Finance Director of Lloyds TSB plc, and subsequently a Non-Executive Director. He is the Senior Independent Director of Coca-Cola HBC SA. He is a Non-Executive Director and Chair of the Group Audit, Risk and Compliance Committee of Standard Life plc as well as being a Non-Executive Director of Gemalto NV and Millicom International Cellular SA. He was the Senior Independent Director of Cookson Group plc and Telent plc (previously Marconi Corporation plc).

  Bob Davies remains on the Board as a Non-Executive Director. He was appointed to the Board of the company as a Non-Executive Director on 10 October 2008. Bob was Chairman of the CBI in the North East until December 2008 and is a Non-Executive Director of Barratt Developments plc. He was Chairman of Biffa plc, from 2006-08 and Chief Executive of Arriva plc from 1998 to May 2006. Bob was formerly a Non-Executive Director of British Energy Group plc and Northern Business Forum Limited.

  Sue Langley was appointed to the Board as a Non-Executive Director on 1 January 2010. She is currently Director of Market Operations and North America for Lloyds of London, joining in July 2007. Sue is responsible for leading operational projects across the Lloyds insurance market and for the network of Lloyds offices in the US and Canada. Previously, she was Chief Operating Officer and a member of the Executive team for the Hiscox Group. Sue is a member of the London Market Reform Group, is currently a Board Member of Acord and is a Vice President Insurance Institute London (IIL). Prior to joining Hiscox, Sue worked for Thomson Tour Operations and PricewaterhouseCoopers, where she was a Principal Consultant specialising in change management.

  Keith Morgan was appointed to the Board as a Non-Executive Director on 1 January 2010. He is Head of Wholly-Owned Investments at UKFI, responsible for managing the Government's shareholdings in Northern Rock and Bradford & Bingley. Keith, joined UKFI from Banco Santander. Until July 2009, he was a Board director of Sovereign Bancorp in the US focusing on the integration of Sovereign into Santander. He was previously Director of Strategy and Planning at Abbey National, where he was a member of the Executive Committee, and was also Chairman of Santander's Asset Management and Credit Card businesses in the UK. Before joining Abbey in 2004, Keith spent 18 years at LEK consulting, where he was a Partner specialising in financial services.

  Philip Remnant remains on the Board as Non-Executive Director, having been appointed to the Board of the company on 22 February 2008. He is Chairman of the Shareholder Executive and is a Senior Adviser of Credit Suisse's investment banking division in Europe. Previously, he was a Vice Chairman of Credit Suisse First Boston in Europe and was Director General of the Takeover Panel between 2001 and 2003. He formerly held senior investment banking positions with BZW and Kleinwort Benson.

  Andy Tate joins the Board as Chief Operating Officer, having joined the company on 1 October 2008 as Director of Debt Management. Andy has led the significant investment in the debt management function to ensure that the maximum possible support can be provided to customers facing financial difficulty. He has 25 years' experience in retail banking, initially with National Westminster Bank and then Royal Bank of Scotland since 2000. At RBS he held a number of senior positions in strategy, change management and operations, latterly as the Head of its Collections and Recoveries operations. In addition to his existing responsibilities for debt management, he takes responsibility for Mortgage Operations.





 
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