Northern Rock staff face job cuts from both bids
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Your support makes all the difference.The two remaining bidders in the race to take control of Northern Rock yesterday both admitted they may have to make compulsory job losses under plans to shrink the bank and repay the Government's loans.
Paul Thompson, who will lead the bank if its standalone rescue bid is successful, said he could not guarantee employment for all those who wanted to stay. Virgin, Mr Thompson's rival, also said it might have to make compulsory job cuts, despite a previous pledge of no redundancies from Sir Richard Branson, who heads the company.
Mr Thompson said: "It is a truism that if the business needs to be smaller because the taxpayer needs repaying, it will need fewer people to run it."
He said natural staff turnover of 10-15 per cent a year would help to shrink the business so that forced departures would be minimal. Many sales staff would also be redeployed as independent advisers, paid to find customers new deals at rival mortgage lenders as part of a plan to shrink the bank to "pre-bubble" levels over three years, he added.
Mr Thompson, former chief executive of the insurers Britannic and Resolution, joined Northern Rock last month as a non-executive director. He said the bank would lend £2-3bn a year for three years until the Government's loans – which stand at about £24bn – are repaid. At the same time it would try to repair its shattered deposit base.
One of Virgin's key selling points is that its brand would replace the Northern Rock name. But Mr Thompson said he was confident that the Northern Rock name could attract savers after a recent product launch lured about £500m of deposits in its first two weeks.
Virgin yesterday sought to play down the threat to jobs posed by its bid but said that some cuts could be necessary.
Northern Rock is the biggest private-sector employer in the North-east with about 6,000 staff. Unite, the union, said it would oppose any compulsory cuts.
RAB Capital and SRM Global, the two hedge funds that have opposed Virgin's bid, bought shares in the company yesterday for the first time since 10 January. Both had supported Olivant's rescue proposal but the investment firm failed to submit a bid on Monday.
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