Northern Rock has hired a new chief executive officer to head up the troubled lender, paying him an impressive salary of £700,000 a year plus “compensation” of £1.2 millon.

Gary Hoffman is currently an executive director of banking giant Barclays, but has resigned his position to join Northern Rock from 1 October. He replaces Andy Kuipers, the current CEO and last member of the bank’s original board, who will leave the company at the end of August after 20 years of service.

Ron Sandler, the man brought in by the government at executive chairman to turn the devastated bank around, will become non-executive chairman from October.

Hoffman’s basic annual salary will be £700,000 in his new role, and he will be entitled to receive £1.2 million in three separate payments in compensation for the loss of his participation in various Barclays’ long-term incentive programmes.

He says: “I am excited by the prospect of leading the company back to a position of strength, delivering our plan and returning Northern Rock to private ownership as a thriving, stable business.”

• Northern Rock