Northern Rock to shed up to 650 jobs
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Northern Rock has announced plans to cut 650 jobs by the end of the year as part of its restructuring plans.
The lender has entered into a formal 90-day consultation with staff and it says compulsory redundancies will be avoided wherever possible and a voluntary redundancy scheme will be implemented.
The legal and capital restructure of the former Northern Rock business was completed in January 2010, creating two separate companies – Northern Rock plc and Northern Rock (Asset Management) plc.
Following that restructure there remained approximately 4,500 employees, serving both companies.
The next phase in restructuring Northern Rock plc for a return to the private sector involves the alignment of the total number of employees to the smaller size of the business.
For example, the company is currently writing one-fifth of the mortgage business it did at its peak.
It says the proposed restructure will improve operational efficiency and reduce the cost base of the company but it is too early to say which areas the job cuts will come from.
The proposed restructure will involve jobs at all grades and the overall process is expected to conclude at the end of the year.
Northern Rock will also close the final salary section of the Northern Rock (2010) Pension Scheme to future accruals.
Members of the final salary section of the scheme will be offered future membership in the money purchase section of the scheme. The company proposes to improve the terms of the money purchase section of the scheme.
Gary Hoffman, chief executive, of Northern Rock, says: “We remain in public ownership and it is important that we continue to deliver value for taxpayers.
“There is still a challenging economic environment and in order to meet our objectives, we must align our staffing level to match the smaller size of the business, increase efficiency and reduce our cost base.
“Regrettably, this will involve a reduction of up to 650 jobs. We have entered a formal consultation period with Unite, and other employee representatives, during which we will discuss how we can achieve that.
“This is an unsettling time for our employees and we will keep them well informed throughout the process. We will avoid compulsory redundancies wherever possible and offer a voluntary redundancy scheme. We will work with local agencies, including One NorthEast, to provide as much support as we can to those affected.”
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