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Northern Rock, the recently nationalised mortgage lender, today confirmed plans to lay-off nearly a third of its staff, with the majority of job cuts expected this year.
The bank said today that it will cut 2,000 of its 6,500 employees, as it attempts to reduce costs and return the company to private ownership.
Northern Rock will open discussions with unions about the proposed cuts, which will be completed by 2011, although the company said that most jobs will go in 2008 "across all levels of staff". The bank is intending to pay back a £25 billion emergency loan that the Bank of England supplied in September last year when Northern Rock made a catastrophic profit warning that led to a run on the lender. The new management of the bank is hoping to repay the loan over the next three to four years.
Graham Goddard, deputy general secretary at Unite said: “If downsizing goes ahead, Unite will be demanding that Northern Rock gives a commitment to no compulsory redundancies.
“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.”
Ron Sandler, executive chairman at Northern Rock, said: “In order to meet our previously-stated corporate objectives, it is necessary for us to contract to a smaller and more sustainable business. Regrettably, this is likely to involve a reduction in current staffing levels of around 2,000 and a restructuring of the company.
“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. We remain closely engaged with local agencies, including One NorthEast, to ensure that those who may be affected are offered as much support as possible.”
Northern Rock said today: "The company will now commence the formal 90-day consultation period with Unite and other employee representatives, with the inaugural meetings planned for May 1, 2008. The likely start date for any potential job losses has not been set but will be agreed, with Unite and other employee representatives, during the course of the consultation period."
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If you read between the lines this is great news! It just means Ron Sandler is doing the job properly. I can't believe anyone thought this would be an old fashioned, very inefficient, nationalisation of days gone by. Sandler will get this company back on its feet, then it can be sold at a profit!
Marcus, Perth, Australia
2000 lost jobs and blighted livelihoods is a small price to pay for Adam Applegarth's bonus and pension package; after all, he was the principal architect of this whole catastrophe and that kind of vision and leadership doesn't grow on trees.
David Masu, Zürich,
One might have hoped that this nationalisation would protect jobs and allow NR to supply affordable products to those who might otherwise struggle to get a mortgage. Shamefully for a supposedly Labour government, in both cases the exact opposite has happened.
mbatey, Sheffield ,
How much per employee did the taxpayer cough up to save the remaining jobs? What exactly was the point of "saving" this company? What prevented it from being merged with a solvent bank? Will the Govt. do the same for other non-bank companies?
jon livesey, Sunnyvale, CA/USA
Surprising use of words from Mr Sandler, ''2000 of CURRENT jobs' in the official release. Therefore, does this cut of roles not incude the 5-700 staff whom have left since the troubles began and not been replaced due to the employment/promotion embargo within NR?
Chris, Lonon,
Being confident that the government would never intervene to save my job I ask : "consultation... why?"
e skelton, cardiff, uk
Surprise surprise.
Farrukh, Woking, UK
Unite said: If downsizing goes ahead, Unite will be demanding that Northern Rock gives a commitment to no compulsory redundancies." Good luck with that!
The workforce did not contribute to the situation which the bank now finds itself in..." The workforce are the bank. All for one etc.
Tom, London, UK
How long before this Nationalised Bank collapses, akng with it billions of taxpayers' money?
Neil, Gloucestershire, England
Businesses close every day for any number of reasons so Norther Rock employees should be thankful they still have a job in a bankrupt company. They should use the time wisely to adjust to their new reality not ponder that reality to simply apportion blame elsewhere.
Barry, Shrewsbury, Shropshire
i sincerly hope that those that lose their jobs and those that have lost their savings realise that the Govt could have prevented this from happening if they had acted last August with a loan similar to that which the Bank of England has just made to the banks. However the Govt dithered.
TC, London,
If only they had stayed a Building Society.It shows what greed does.
stephen hulton, eure, france
Guys they are in business fault or no fault
ak, London, uk
thanks to the Brown Mismanagement Company. Another nail in his coffin.
Albert Hall, kettering,
God help all those working for Northern Rock, i hope the workers have some representation, i am only little investor, but
my heart goes for working these bankers, there's hardly a union you can all it, God be with you all Northern Rockers:
Cllr Ken Tiwari (independent), Oxford, United Kingdom
I think this kind of situation will be more and more in Europ and north America. In the end these Bank or investive bank will be held by China enterprise(state own) or other asia cooperation.
Hweitt, SHANGHAI, China
When a company does not have enough money to meet its financial obligations it is technically bankrupt. From that moment on the "jobs" become known as "non-jobs". This is a harsh term which infers that jobs in non profitable private businesses will inevitably cease to exist (albeit not immediately
David Pengilly, Long Ditton,