Yorkshire Bank’s new CEO earned £1.346m for 17 weeks’ work

David Duffy
David Duffy
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YORKSHIRE BANK paid its new chief executive £1.346m for 17 weeks’ work, according to its annual accounts.

That equates to more than £79,000 a week for David Duffy, the banking veteran brought in to lead the demerger and initial public offering of the lender.

The accounts also reveal that the bank recorded a statutory loss of £308m for the year ending September 30 2015 as a result of costs including increased provisions for bad conduct, restructuring expenses and investment in the business.

National Australia Bank is preparing to exit the UK market with the sale of Yorkshire Bank and sister brand Clydesdale by February. It hired Mr Duffy from Allied Irish Banks after his successful three-year turnaround of the nationalised lender.

The former Goldman Sachs banker earned 425,000 euros in his last year at AIB, a salary capped by the Irish government.

His package of emoluments at Yorkshire Bank includes a commencement award - a “golden hello” - of £500,000.

A spokesman for Yorkshire Bank said: “Appointed on June 5, the new CEO’s remuneration reflects his significant plc experience and the scope and responsibility of his role with reference to the market.

“This is a key leadership role at a pivotal moment in building an independent future for what would become the largest of all the UK challenger banks.”

The accounts show that predecessor David Thorburn received total emoluments of £1.412m in 2015. He resigned at the start of 2015 after a long career at the bank. He previously served as chief operating officer.

The spokesman added: “After service to the group spanning over three decades, the last four of which were as CEO, David stepped down in February to allow for new leadership to take the bank through the next stage of its development.”

Yorkshire Bank paid John Hooper £857,000 after he stepped down as an executive director on October 31 2014, one month into the financial year.

At the behest of regulators, the bank has set aside provisions of £1.7bn to cover the cost of mis-selling payment protection insurance to consumers and toxic loans to small businesses.

By the year end, total provision raised for PPI stood at £1.196bn. Total provision for interest rate hedging products amounted to £506m. The bank said potential liabilities are “uncertain and further provision could be required”.

The Financial Conduct Authority slapped the bank with a £21m fine in April for failings in its PPI complaint handling processes between 2011 and 2013.

The accounts record that the lender received 226,000 complaints relating to the mis-selling of PPI during the year - the equivalent of 619 per day.

Conduct issues have overshadowed the improving financial performance of the bank in recent years.

Like all lenders, its fortunes are closely tied to the wider economy and Australian investors who have long complained about the UK operations acting as a drag on NAB’s profits are starting to look again at Yorkshire and Clydesdale as Asian markets slow down.

Yorkshire Bank has invested heavily in new technology as part of its omni-channel banking strategy. It has also beefed up its board with experienced new hands.

Excluding costs, it made an underlying profit of £146m for 2015.

Mr Duffy said: “These positive underlying results demonstrate the significant progress of the business.

“We’ve laid strong foundations for an independent, sustainable future and the growth in customer lending and deposits combined with improving asset quality are all very encouraging.

“We’re continuing to invest in improving our products, channels and services which is good news for our customers.”

The bank has 2.8m retail and business customers, with customer deposits of £26bn and a loan portfolio of £28bn, including £20bn in mortgages.

Jim Pettigrew, the £300,000-a-year chairman, said: “It’s been a year of significant change for the business as we prepare to stand alone as an independent bank and to create a genuine alternative in the UK banking market.”