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NR plans to focus on direct channels

Northern Rock is to slash lending via brokers this year as it launches a major downsizing programme.

The bank’s proposals, set out in its post-nationalisation business plan published last week, reveal it will have a smaller presence in the broker sector.

NR says it will concentrate on its most important partners as well as writing mortgages direct.

As many as 2,000 jobs are to be axed in the next three years as the lender shrinks in size.

All forms of government support are to be phased out in the next three to four years and the bank’s asset base, believed to include a £106bn loan book, will be cut by around half. The Bank of England will also be repaid the £26bn it loaned to NR in the next three to four years.

NR plans to increase retail deposits to form a larger share of overall funding and its current domestic branch network will be maintained to support this growth.

But NR’s competitive taxpayer-backed savings rates have sparked fears of unfair competition.

Adrian Coles, director-general of the Building Societies Association, says: “This does little to allay our fears of unfair competition from the taxpayer-funded bank. Taxpayers deserve to see as much detail as possible about the plans of the bank they own.”

The British Bankers’ Association has written to Ron Sandler, executive chairman of NR, to ask for details about the bank’s competitiveness.

A spokeswoman for the BBA says: “We are concerned about how NR will maintain a level playing field.”

NR says it will not use government support to compete on an unfair basis.

Sandler says: “This is a robust plan to create a smaller mortgage and savings bank that will be focussed and fi-nancially viable.

“When it comes to organisational restructuring, we will work sensitively with our staff and trade unions to minimise the extent and negative effect of job losses.”

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