NR to axe up to 2,000 jobs

Up to 2,000 jobs will be axed at Northern Rock during the next three years as the bank undergoes a major downsizing process.

The beleagured UK bank is also looking to have a much smaller presence within the intermediary mortgage market.

Going forward it says it will concentrate on its most important partners, as well as writing mortgages via direct channels.

All forms of government support will be phased out during the next three to four years. The bank’s £106bn asset base will also be cut by around a half.

The statement says it will become a smaller, more focussed, financially viable mortgage and savings bank.

The board says these proposals form the business plan for the period of temporary public ownership.

The plan will be submitted to the Treasury for approval by the end of the month.

The government has today confirmed it has sent the European Commission notification of its plan to continue providing the emergency loan to NR to support this process.

The board has emphasised its plan to eventually return the bank to the private sector.

The bank plans to repay the Bank of England over the next three to four years, while increasing the level of retail deposits to form a larger share of total funding.

Ron Sandler, executive chairman of NR, says: “I am pleased that we are making good progress in developing our provisional business plan. This will be a robust plan to create a smaller mortgage and savings bank that will be tightly focussed and financially viable.

“It will be a demanding plan, and one that will carry a number of financial and operational risks.”

He adds: “Market conditions remain uncertain and a protracted downturn in the housing market would clearly present challenges to its achievement. But we are testing it carefully across a range of scenarios and are confident that we can produce a plan that will be delivered.

“As regards the organisational restructuring, we will work sensitively with our staff and UNITE to minimise the extent and impact of job losses.”