Northern Rock commences talks with staff over 2,000 job losses

| May 2, 2008
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Crisis-torn Northern Rock, which was taken into public ownership on February 22, has commenced talks with staff over plans to axe 2,000 jobs.

Northern Rock said the company will now commence the formal 90-day consultation period with Unite and other employee representatives, with the inaugural meetings planned for May 1, 2008.

The likely start date for any potential job losses has not been set but will be agreed, with Unite and other employee representatives, during the course of the consultation period.

It was initially believed that the job cuts were to be over a three-year period.

The majority of the losses will be in the North-East of England at the bank’s headquarters.

However, the Unite union has called on Northern Rock not to make compulsory redundancies at the bank.

Former Lloyds of London boss, Ron Sandler, who is currently in charge of the bank, said this is a very difficult time for our people and we will continue to work closely with them and Unite, to minimise the extent and impact of potential job losses.

Graham Goddard, deputy secretary general of Unite, said that Northern Rock employees had been loyal to the bank during seven months of uncertainty.

The workforce did not contribute to the situation which the bank now finds itself in and should not be expected to pay the ultimate price by being forced out of their jobs, said Mr Goddard.

After rejecting takeover bids from the board of Northern Rock and a consortium led by Sir Richard Branson’s Virgin Group, the Government rushed through legislation to nationalise the bank in February.

Last week, it was confirmed Northern Rock’s shareholders were believed not to be in favour of the nationalisation and have since been threatening legal action.

The UK Shareholder’s Association (UKSA) (acting on behalf of the Northern Rock’s shareholders) believes that the UK Government confiscated the shares even though there was a good private sector solution on the table which would have enabled Northern Rock to repay its contingency loans to the Bank of England, and continue as a viable company.

SRM, together with RAB Capital, the bank’s two largest shareholders, face combined losses of approximately £170 million following the nationalisation. The two companies are also expected to commence legal action against the bank.

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