Keeping jobs is not top priority

Nov 2 2007 by Adrian Pearson, The Journal

THE new chairman of Northern Rock has warned jobs cannot be guaranteed as the bank heads towards an “increasingly likely” sale.

Bryan Sanderson yesterday authorised the bank to send out information packs to any potential bidders and warned it was unlikely that any future sale could go ahead without some reduction to the 5,700 workforce employed across the region.

The new chairman, appointed after Matt Ridley left the company in October, said Northern Rock could be more than £25bn in debt by the time the Government aid dries up in February.

And while he praised the work done by the Northern Rock Foundation, he could not offer any guarantees on its future.

Speaking exclusively to The Journal, Mr Sanderson said the bank was considering all options – including selling up or remaining independent.

He said: “When you owe £20bn to the Bank of England then all the options have to be looked at.

“I’m here to make sure the shareholders are looked after in the best way and we want to examine every option. The debt is not quite £20bn just yet but it’s getting there and it could be as much as £25bn by February.

“We don’t know yet if there is an independent future for the bank. We have to wait and see.

“Was it avoidable, I just don’t know. There does seem to have been a perfect storm.

“If a few little things had been different this might never have happened.

“So what we are doing with the help of the advisers is prepare an information background pack which will go out to those who want it and then we will start talking to a lot of people who we hope are going to come up with various propositions.

“If the company is sold does it necessarily have to involve job losses? Well it’s very hard to answer because we don’t know what any potential buyer will do with the bank.

“It could be they run it as it is and there are minimal changes but on the other hand that is not the most likely outcome.”

Mr Sanderson later added that safeguarding jobs was not his priority at the bank.

He said: “I think the answers to job losses depend on the offers. At the moment we are just not filling vacancies, which reduces the work force by 600 a year, and that is helpful.

“All I can reasonably say about staff security is we will do the best we can and try to keep them as informed as we can during negotiations.

“We are right at the very front stage of negotiations right now, we have done an analysis, we have created a memorandum of where the company is and now we have to see what sort of reaction we can get right now and what propositions we get.”

In a revealing interview County Durham born Mr Sanderson said he was proud to be working for a North-East company with a track record of commitment to the region.

But he could not offer any firm security on the future of the Northern Rock Foundation, which receives 5% of the bank’s annual profits to donate to good causes in the region.

He said: “The Foundation is fantastic with an unparalleled track record in its department.

“It has rights to do with its 15% shareholder status which will be honoured but I can’t say any more on its future at this stage. As you can tell it is very hard to give any guarantees or predict what will happen.”

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Workers must be protected

UNION leaders and politicians have warned that Northern Rock bosses must do all they can to prevent job losses at the bank.

Yesterday the bank finalised information packs for potential buyers and admitted it was unlikely the sale would go ahead without some job losses.

Unite, who represent most of the bank’s workforce, said the staff deserved to be kept informed.

A spokesman said: “We have been assured there will be no compulsory redundancies and that has always been our first concern.

“What we can say now is that we think there is significant scope to deal with any potential redundancies through voluntary measures and that is what we would hope for if the worst case scenario happens.

“Like most people we would prefer it to remain a single entity and not broken up into different parts and sold off.”

His concerns were echoed by Newcastle North MP Doug Henderson, who called for the bank to offer the firmest assurances it could to the 5,700 North-East employees.

He said: “I will be in contact with the union Unite to make representation for them and on their behalf to try to keep the company in the North-East and we have to do our best to ensure we keep as many jobs here as possible. Northern Rock is vitally important to the North-East in terms of our economy and we will be hoping whatever happens that the bank remains based within the region.”

PR agency boss Robin Ashby from the Northern Rock Small Shareholders Group welcomed the promise to put them first.

“We are grateful that someone is finally recognising the responsibility to the share holders. This is the first time someone has said they will be putting us first and we welcome that. Our preferred option is for the bank to continue and build up its strength again, based here in Newcastle. We were always prepared to stick by the company as long as it takes.”

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The Rock has to be managed properly

BRYAN Sanderson may have taken on the most difficult job in the North-East, but there few better placed than he to oversee events at the bank.

Mr Sanderson is a former chairman of Bupa and of banking group Standard Chartered.

And as well as sitting on the board of regeneration group Sunderland Arc and Durham Cricket Club he also has strong family connections to the region.

Mr Sanderson said: “There is a picture of a lighthouse in the office which is fitting because my mother’s father first came up here to be a light house keeper.

“I haven’t just came here for personal gain. I don’t get a bonus for a quick sale of the company, or for a sale at all.

“I’m just on the flat rate.

“You ask why did I take the job, well, my wife asked me the same question.

“I’m here because it’s the North-East, because it’s a challenge and because they have something to offer.

“I suppose there’s another reason because this is not just important to the North-East but to the financial reputation of the UK.

“It has to be managed properly. It has already been slightly damaged and we have to make sure nothing worse happens.”

Mr Sanderson has insisted that no option has been ruled out, including the bank continuing as an independent North-East institution – his personal preferred option.

He said: “We will take today’s decisions today and tomorrow’s tomorrow.

“Personally I would like to see the bank continue independently but of course that counts for nothing.”