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Virgin will axe 1,000 jobs if Northern Rock takeover successful

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by Kay Mitchell

The consortium led by Sir Richard Branson’s Virgin Group has announced it will shed jobs if it emerges as the preferred bidder for the crisis-torn bank.

Virgin previously said there would be no job losses at the mortgage lender so this admission has been a major blow to the Government.

Virgin Money boss Jayne-Anne Ghadia, who would run Northern Rock if it wins approval from Gordon Brown and Chancellor Alistair Darling, said job cuts would be crucial to a successful rescue package. We can’t continue to make the promise that there will be no redundancies, she added.

Jayne-Anne Ghadia said that the cuts were essential because the Treasury is insisting that Government backed bonds to be issued by Northern Rock must be repaid in 3 years rather than the 5 years originally outlined.

It is believed that 1,000 of Northern Rock’s 6,500 staff would be axed, with hundreds more jobs lost through natural wastage, leaving the bank with about 5,000 employees.

Virgin has remained the preferred bidder throughout, however a stand-alone solution by Northern Rock’s board and nationalisation is not being ruled out.

It is understood Treasury official, John Kingman, has met with Luqman Arnold, head of Olivant, who pulled out of the bidding war for Northern Rock late on Monday.

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News posted: February 7, 2008

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