Northern Rock to make 800 compulsory redundancies

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The Independent Online

Northern Rock will shed about 800 staff through compulsory redundancies to achieve a total of 2,000 job cuts by 2011, the nationalised bank said.

The lender said it had consulted the Unite union and other employee groups about the cuts, which will also include 500 voluntary redundancies and natural staff turnover. Workers are being informed which jobs are at risk.

The compulsory cuts will be limited by redeploying people elsewhere in the business where possible, the bank said yesterday. Northern Rock is aiming for a workforce of about 4,000 and any further cuts will be made through natural turnover.

Ron Sandler, the bank's executive chairman, said: "Confirming job losses is never easy but our staff have been kept well informed and the need to contract the size of the company is well understood.

"This remains a very tough time for our staff but the restructure of the company is nearing completion and we are now in the final phase of this difficult process."

Mr Sandler is roughly halving the size of Northern Rock's balance sheet to repay more than £20bn of loans from the Bank of England. Once the bank is stripped down, the Government intends to return it to the private sector.

Northern Rock grew rapidly to become the biggest private-sector employer in the North-east but the bank's once-booming lending business is now doing minimal business.

Today is the Government's self-imposed deadline for submitting evidence at the High Court for the judicial review into the terms of its nationalisation. Small shareholders and hedge funds are challenging its arrangements for compensation, which they say are rigged to value the bank at nothing.

The Treasury has received applications from more than 10 potential valuers of the bank. A decision on the valuer is not likely before early September.