Northern Rock
Up to 3,000 Rock jobs under threat
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| DRAWING UP PLANS: Ron Sandler, executive chairman of Northern Rock, in Gosforth, yesterday |
UNIONS last night demanded answers about the future of jobs at Northern Rock amid fears that up to half the 6,000 workforce could be shed.
Officials spoke out as newly-appointed executive chairman Ron Sandler began drawing up plans to cut the bank down to a manageable size.
Mr Sandler, who was appointed by Chancellor Alistair Darling to rescue the newly-nationalised bank, believes a leaner Northern Rock will be better able to ride out the present market chaos ahead of a return to the private sector.
The former Lloyds of London boss, who was lured into the Northern Rock job with a £90,000-a-month salary, gave a press conference at the bank's headquarters in Gosforth, Newcastle, yesterday, but could not give answers about potential job losses.
He said: "I am not able to say because this is my first morning at the business and I clearly need a bit more time to understand the way it will work.
"As soon as I am in a position to talk more clearly about our plans, then I will do so."
Analysts said as many as half the workforce, including 5,000 in the North-East, may have to go.
Last night, the Unite trade union demanded a Government guarantee for Northern Rock staff and called for no compulsory redundancies.
Deputy general secretary Graham Goddard said: "The restructuring plans must consider the economic impact for the North-East.
"Throughout this crisis, the workforce has been committed to the future of the company and they deserve recognition for this.
"We will oppose any attempt to asset strip Northern Rock. It is vital for the North-East that the plans for public ownership take into account the implications for the region."
Mr Sandler yesterday denied speculation that Northern Rock would be run down under nationalisation, saying public ownership was not about running the bank "down to extinction".
Instead, he said his leadership would be about stabilising the bank and developing it into a profitable business that could then be sold back to the private sector.
Mr Sandler told journalists in Newcastle: "I want to reassure staff that the process of temporary public ownership is a good thing.
"It gives the bank a period of stability and a chance to pull back from some of the forces that have buffeted it in previous months."
Although he said it was "business as usual" at the bank, he conceded that EU rules on state aid would put restraints on its activities while it was nationalised.
"Within these constraints we will compete vigorously," he said.
It is unclear what impact the rules will have on the rates the group is able to offer its savers and borrowers, with some commentators speculating that it will be forced to reduce them.
There are also likely to be complaints from other banks if they think Northern Rock has been given a competitive edge as a result of the Government guarantee and loan.
The British Bankers' Association said it was reviewing competition law.
Mr Sandler said yesterday it would be "some years" before the Government loans were repaid in full.
Meanwhile, faced with Tory jeers in the Commons, the Chancellor said the temporary nationalisation of Northern Rock was in the best interests of the taxpayer.
He said emergency legislation to bring the bank into public ownership would be rushed through Parliament, starting today.
He said the new board and the bank would "operate at arm's length from the Government, with commercial autonomy for their decisions".
But Shadow Chancellor George Osborne mocked the Government's "dither and delay", insisting that no previous Chancellor has had to come before MPs to announce the nationalisation of a High Street bank.
He said nationalisation amounted to the "slow, lingering death of Northern Rock and Britain's reputation as a major financial services centre", with Mr Darling cast as the "undertaker".
Conservative Party leader David Cameron also called on Gordon Brown to sack Mr Darling over the crisis.
2:02am Tuesday 19th February 2008
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