Northern Rock yesterday confirmed chief executive Gary Hoffman will quit the firm for NBNK Investments, the new high street banking venture established by Lloyd’s of London chairman Lord Levene.
Hoffman will be placed on gardening leave until 30 April, until which point he will receive his full £700,000 a year salary, car and petrol allowance and pension paid at 40 per cent of salary.
He will not receive a bonus for the year or a “golden handshake” payment.
Chairman Ron Sandler will step up to executive chairman – the position he first held in 2008 – with immediate effect. Sandler says the bank has no plans to find a replacement chief executive and he will take on his new role “indefinitely”.
He denied Hoffman’s departure was linked to the imminent re-privatisation of Northern Rock.
The move causes a headache for the taxpayer-owned bank as NBNK is widely regarded as a potential buyer for Northern Rock.
However, under the terms of the agreement, NBNK will not be allowed to bid for the bank for at least 12 months, potentially forcing the taxpayer to maintain control of the troubled lender for longer than planned.
Sandler stressed there is “no timetable or process in place” for the sale of the bank.