Troubled UK mortgage bank Northern Rock has appointed Rick Hunkin as its chief risk officer. He will join the company by September 1, 2008.
Hunkin has 28 years' experience in retail banking and was most recently chief risk officer with GE Money UK Home Lending, London-based GE Money's largest retail mortgage business. He was responsible for setting strategic risk direction and managing all aspects of risk with a team of around 125 people.
Northern Rock suffered from a liquidity crisis last August and September, when liquidity in short-term money markets dried up. The bank had derived 72% of its funding from wholesale markets and found itself struggling to meet its financial commitments. A collateralised liquidity facility was quickly put together on September 14 by the Bank of England, to, as it put it, "help the lender through the period of financial instability". But this act of support further shook confidence in the mortgage lender, prompting a classic bank run. On February 22 this year, the bank was nationalised on a temporary basis.
Subsequently, on March 31, Northern Rock committed to a business plan to repay the debt to the Bank of England, to release the guarantee from the UK government’s Treasury and return the bank to the private sector. This included an objective to strengthen the risk and control environment throughout the company, and it said in a statement on July 7 that Hunkin’s appointment will help meet this.
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