B&B staff in line for up to £3m in bonuses

Staff at Bradford & Bingley, the UK mortgage lender that was nationalised last year, are set to receive bonuses that could be worth £3m.

The bank has said it plans to pay 150 senior and middle managers £1.3m of deferred bonuses to help retain staff as B&B winds down its buy-to-let mortgage book.

These payments will not be immediate. However, £1.7m of immediate payments will be made to 800 junior staff, who will receive a bonus of just under 8 per cent of their salary, which averages £22,000.

The awards are likely to spark anger because Bradford & Bingley had to be nationalised last year and its savings book and branches were sold to Spanish bank Santander.

B&B, which launched a rights issue that had to be restructured three times, is now involved in running down a mortgage book that has 300,000 customers.

Northern Rock, the other state-owned lender, has also said it will pay deferred bonuses to 500 staff in spite of making £1.4bn loss in 2008.

Richard Pym, executive chairman of Bradford & Bingley, said the bonuses had been agreed with the UK government.

He said it was essential to maintain the commitment of colleagues “who bear none of the responsibility for the events of last year“.

Mr Pym, who expects to become non-executive chairman this year, has already said he will reduce his remuneration in 2009, although he was paid a £139,000 pro rata bonus relating to 2008.

From April 1 this year, his basic salary will decrease from £750,000 a year to £350,000 and his guaranteed bonus will fall from £187,000 to zero.

Mr Pym, whose pay was agreed before the bank was nationalised, said: ”I have been thinking about this issue for some time and have now made a personal decision because of Bradford & Bingley’s unique position.

“There is no prospect of the bank returning to its previous state and therefore it is appropriate that my remuneration reflects this change.

“Like many others, I have been following the wide public debate on both sides of the Atlantic on the remuneration for executives at banks requiring state assistance and I believe this is the right thing for me to do.”