View more on these topics

NR processors may face axe

Northern Rock staff processing further advances and remortgages could become victims of the bank’s redundancy programme, the bank’s former finance director claims.

NR, which was nationalised in February, plans to reduce its 6,000-strong workforce by around 2,000 by 2011.

Although an NR spokesman says it has not yet been decided which departments will be affected, Bob Bennett, who retired from NR last February, ex-pects staff involved in processing further advances and remortgages to be worst hit.

He also expects the business to struggle to meet its target of increasing its retail savings book to £25bn by 2012.

NR set the target in its annual re-sults announcement for 2007 last week, adding that it will not allow its share of the UK’s total retail deposit balances to exceed 1.5%. The bank’s savings book was worth £10.5bn in December.

Bennett says: “It is difficult to envisage how NR can hit this target without market-leading products.”

Under European rules it is deemed anti-competitive for a company receiving state aid to launch competitive products.

Last week, the European Commission launched an investigation into the government’s rescue of NR to ensure its rules have not been breached.

Neelie Kroes, competition commissioner at the EC, says the probe will ex-amine the scale of government funding, the background market conditions and the risk of competition being distorted.

Ron Sandler, executive chairman of NR, says: “Without distorting competition, we are determined to create a vi-able business that can be returned to the private sector.”

In its results statement, NR revealed a £167m loss in 2007 and plans to repay the Bank of England’s £24bn loan by 2010.

The bank also revealed a gross lending target of £5bn per year for the next three years. This compares with the £32.3bn and £33bn gross lending it wrote in 2007 and 2006 respectively.

NR is in talks with trade union Un-ite ahead of a 90-day formal consultation period with the bank’s staff.

Recommended

Arrears crisis is only a matter of time

When the liquidity crisis began I suggested it might lead to an arrears crisis. This seems increasingly likely as more products disappear from the market.

Chelsea withdraws Prospect sub-prime range

Chelsea will be withdrawing its sub-prime Prospect range from close of business today.It will be introducing sub-prime rates via Prospect tomorrow.The rates will be available on the website from Tuesday morning. All other Chelsea mortgage products remain unchanged.Prospect applications on the current range must be submitted by 5pm today to secure the rate.

Working life is frustrating for brokers

The FSA’s decision to add another layer of red tape to the regulatory system is a symptom of why much of the joy has gone out of working in the financial services industry, says Sue Read

FTB fees up 35% year-on-year

Average fees for first-time buyers on the top five mortgages have shot up by around 35% since this time last year, says Mform.co.uk.

Newsletter

News and expert analysis straight to your inbox

Sign up