Northern Rock cuts 2,000 jobs

by Gill Montia

Story link: Northern Rock cuts 2,000 jobs

Northern Rock has published its restructure plans, which include reducing the bank’s workforce from 6,500 to 4,500 by 2011.

The majority of the job losses will be in Tyneside and trade union, Unite, has said it will oppose any compulsory redundancies, arguing that the cut backs should be achieved through voluntary redundancies only.

The bank also plans to cut its mortgage lending, reducing its loan book from the current value of £100 billion, to around £50 billion.

It will achieve this by selling off mortgage assets and withdrawing from new business, with the result that many customers will be forced to look elsewhere when their mortgage deals come to an end.

In future mortgage business will be aimed at the prime sector and the bank will also withdraw from the unsecured loans market.

Northern Rock’s management has confirmed that it hopes to pay back its £25 billion emergency loan from the Bank of England over the next three to four years.