Workers at the bank are to get payments totalling ten percent of their salary, a move which has provoked strong words from Vince Cable.
Northern Rock staff are to receive a ten percent bonus, it emerged today.
The supplementary payment, which will include all of the bank's 4,000 workers, has been triggered by Northern Rock hitting targets in paying back money it owes to the government.
It is likely that the bonuses will provoke controversy, however, due to the bank's recent history. It collapsed in 2007 as the credit crunch pitched it in to a revenue crisis.
Northern Rock's business model had made it highly dependent on borrowing money, rather than using customer deposits, to fund its own growth programme. Therefore, when this supply froze in the financial crisis, the bank failed and had to be rescued by the government.
In February 2008, Northern Rock was nationalised outright. It is currently running down its mortgage book and attempting to pay off government bailout loans - deadlines for which were relaxed earlier this week as part of the Treasury's new package of measures to boost lending at banks.
Commenting on the bonus move, Liberal Democrat shadow chancellor Vince Cable said: "This is bringing the worst of the City bonus culture into a public body. This is an extraordinary action from a state-owned bank which still owes billions to taxpayers.
"When millions of people are facing pay cuts or even unemployment, this is indefensible. The government should step in to stop this now."
Government loans to Northern Rock total around £26 billion, around half of which has been paid off. The bonus package will cost around £9 million.
