THE "bad" part of Northern Rock has launched a recruitment drive in the North-East and reported a profit, whereas the so-called "good" part is running at a loss and shedding hundreds of workers.

Northern Rock Asset Management (NRAM), which was spun off from Northern Rock plc following its collapse last year, is adding about 50 debt collectors to its 526-strong workforce in Doxford Park, Sunderland. It currently employs another 724 workers at its offices in Newcastle.

Three days after Northern Rock plc revealed losses of £232m, and plans to axe 680 jobs, NRAM announced it had turned a £313.4m loss in 2009 to a profit of £277m.

However, those headline-grabbing figures, which suggest the "bad" part of Northern Rock is outperforming the "good" tells only part of the story. NRAM may have repaid £1.1bn of its Government loan last year, but it still owes the Treasury a whopping £21.7bn. Northern Rock plc has no debt outstanding to the Government and its recent announcement to cut jobs is believed by many analysts to have paved the way for a return to the private sector. NRAM is a long way from following suit, and there are growing fears that an interest rate hike could push some of its customers payments to unaffordable levels.

The head of UK Asset Resolution (UKAR), the state owned company charged with managing NRAMs debts, as well as those of Bradford & Bingley, said it had achieved all of its business objectives last year. But Richard Banks, UKAR Chief Executive warned that the prospect of rocketing taxes, unemployment and inflation would jeopardise the speed of its recovery.

Low interest rates has ensured that 87 per cent of NRAM borrowers are up to date with their mortgage payments, and the number of house repossessions fell from 2,061 in 2009 to 1,984 last year. But the number of accounts more than three months in arrears increased by 3 per cent over the year to 25,419.

"Bradford & Bingley and NRAM moved from loss to profit and we continue to focus on managing customer arrears," added Mr Banks. "We will continue to help customers alleviate short term issues and also work with customers with more fundamental problems to enable them to exit the housing market in an orderly way."

The Government split Northern Rock in two at the start of last year, forming a mortgage and savings bank called Northern Rock plc and NRAM which houses the more toxic loans.

The "good" bank, Northern Rock PLC, holds savers' deposits and new mortgages, while the "bad" bank, NRAM, holds the rescued bank's old mortgages and unsecured loans.