2,000 job cuts planned at Northern Rock

Nationalised British mortgage lender Northern Rock today began consultations with unions and staff regarding plans to axe 2,000 jobs.

Nationalised British mortgage lender Northern Rock today began consultations with unions and staff regarding plans to axe 2,000 jobs.

The job losses - around a third of its 6,000 staff - are due mainly this year and form part of plans to shrink the Newcastle-based bank under public ownership.

The Unite trade union has called on Northern Rock not to make compulsory redundancies.

Deputy general secretary Graham Goddard said: "The workforce did not contribute to the situation which the bank now finds itself in and should not be expected to pay the ultimate price by being forced out of their jobs."

The firm was bailed out with £25bn (€31.9bn) in public cash after a funding crisis last September - sparking the first UK bank run for more than 140 years - before being nationalised in February.

The job losses were first announced by Northern Rock's executive chairman Ron Sandler in March.

It was revealed the same month that the man who led the company into the crisis, former chief executive Adam Applegarth, was entitled to a £760,000 (€970,265) payoff.

Mr Sandler said: "This is a very difficult time for our people and we will continue to work closely with them and Unite, to minimise the extent and impact of potential job losses."

At the beginning of the 90-day process however, Mr Goddard called for "meaningful consultation" ahead of any decisions on job cuts.

He added: "Throughout the last seven months of uncertainty the employees of Northern Rock have remained committed to the long-term success of the company.

"Decisions must not be made merely in the pursuit of short-term cost savings."

The union is also opposed to selling off the company's assets cheaply and has demanded assurances over the employment conditions and pension rights of staff.

Northern Rock was crippled by last August's freeze in money markets, where it borrowed most of its cash for lending, after years of rapid growth.

Under public ownership it plans to shrink the size of its mortgage book to around half the current £110bn (€140.4bn) level in a bid to create a smaller business, focused on low-risk mortgage lending and building up savings deposits.

It aims to pay off the Bank of England loans and free the Government from its guarantees over the business within three to four years before a return to the private sector.

The Government is also facing opposition on another front from Northern Rock's former shareholders, who are taking legal action over compensation to investors.

The UK Shareholders Association is seeking a judicial review of the Government's decision to base payouts on the assumption that the crisis-hit firm was unable to continue without public support - leaving shares virtually worthless.

More in this section

Price info

Subscribe to unlock unlimited digital access.
Cancel anytime.

Terms and conditions apply

The Business Hub

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up