Northern Rock to cut staff

Northern Rock is planning to cut over 2,000 members of staff but increase the number of people working in debt management.

The mortgage lender – which was nationalised in February after it suffered the first run on a bank in 140 years in September last year – will increase its debt management team from 176 to 444 by 2009.

However, the total workforce will fall from 5,485 people to 3,440 over the next three years – according to internal memos sent to staff with the union Unite outlining the plans.

A spokesperson for Northern Rock refuted suggestions the document was a secret dossier – but an update to staff in regards to redundancies.

"[Job loss figures] are in keeping with the number of job losses stated for a number of months," she said.

The bank also confirmed job losses will start occurring this year, the figures for job losses were variable due to the consultation process with the union and exploration of any other viable alternatives.

Financial losses at Northern Rock for 2007 stood at £167.7 million and the company does not expect to break even until 2011.

The Novocastrian bank has also taken loans from the Bank of England worth £27 billion – although £2.8 billion has already been paid off and 25 per cent will by returned by the end of 2008.

The full loan is planned to be repaid at the earliest by the end of 2010.

As a part of the lender's plans to reduce the size of the business, mortgage holders coming off low interest fixed-rate deals are being advised by the bank to look for cheaper deals elsewhere.

Daniel Barnes