Britain's nationalised Northern Rock plans to cut up to 650 jobs, or 14 per cent of its staff, by the end of the year, as it presses ahead with an overhaul of the bank to prepare for a return to private ownership.
Northern Rock, Britain's first major casualty of the credit crunch, said today it was aligning the size of its staff with a now much reduced business. The bank, Britain's fifth-largest mortgage lender at its peak, is now writing one-fifth of the mortgage business it did then.
The cuts will affect jobs across the bank, which currently employs some 4,500 people.
Northern Rock also plans to close its final salary pension scheme, with current members being offered membership in the money-purchase section of the scheme, where investment risk is borne by the employee. It expects terms there to be improved.
"We remain in public ownership and it is important that we continue to deliver value for taxpayers," chief executive Gary Hoffman said. "There is still a challenging economic environment and in order to meet our objectives, we must align our staffing level to match the smaller size of the business."
Union Unite, however, condemned cuts that add to 2,000 job losses at the former mutual since it was taken into public ownership in 2008, and called for the government to step in.
"It is unacceptable that we are now seeing rash decisions based on a short-term management strategy in order to make Northern Rock appear more attractive to a private seller," Unite national officer Rob MacGregor said.
"It is now essential that there is political intervention to prevent this business being dramatically scaled back and prepared for sale," he added.
Reuters