Rock resists EU call for more job cuts
Jun 6 2008 by William Green, The Journal
BRUSSELS bureaucrats were yesterday told to recognise Northern Rock’s importance to the region and not demand further job cuts on top of 2,000 already planned.
The call from the TUC came after the European Commission, which is investigating the legality of Government support for the bank, suggested a more rapid downsizing than planned by Rock boss Ron Sandler designed to restore its fortunes. Northern Rock stressed no further job cuts were planned above the 2,000 already announced.
The development came as the Rock announced a tie-up with Lloyds TSB that will see mortgage customers encouraged to switch to the UK’s fourth largest lender.
The Rock said the move was consistent with its aim of repaying £24.1bn owed to the Bank of England by cutting the size of its mortgage book.
TUC regional secretary Kevin Rowan said: “It is important that businesses are run by businesses and not bureaucrats in Brussels.
“But also, we know that the management locally are much more sensitive to the importance of Northern Rock to the economy regionally than the Commission making this decision.”
Stephen Hughes, Labour Euro-MP for the North East, said: “It is ridiculous in the current financial climate for the Commission to be insisting on further deep job cuts. They need to respect the requirement of the European Treaty to take account of the employment impact of their decisions.”
Mr Hughes added he would be writing to European Commission president Manuel Barrosa to outline his concerns.
The Treasury welcomed the inquiry, saying it followed close co-operation with the Commission with both wanting to maintain financial stability and protect taxpayers and consumers.
A Northern Rock spokesman said: “It is an ongoing process and our business plan approved by the Treasury remains on course.
“There is no change to the number of potential jobs at risk that have already been announced, but clearly our new announcement on new mortgage arrangements with Lloyds TSB demonstrates our intention to minimise job losses.”
He said 100 jobs would be secured under the three-year deal in which certain customers coming to the end of fixed rate mortgages will be contacted and offered the chance to apply for a fixed rate loan with Lloyds TSB.
They will benefit from a fast-track application process, with Lloyds waiving its £99 application fee and offering free legal and valuation work.
The deal is open to Rock customers who have at least a 20% deposit and a clean repayment history, although there is no guarantee that applications will be accepted by Lloyds.
Customers who do not want to take advantage of the offer will still be able to remain with Northern Rock or take a mortgage with another provider.
