THE so-called Northern Rock ‘bad bank’ is to shut its office in Newcastle where 700 staff are currently based, it was announced yesterday.

The Government-owned company UK Asset Resolution Limited (UKAR) that also manages the mortgage books of the now defunct Bradford & Bingley, plans to move staff out of the building in Gosforth it shares with Northern Rock by mid-2013.

UKAR also has offices at Doxford Park in Sunderland and Crossflatts at Bingley in Yorkshire, where the rest of its 1,700 staff are based.

Most of the Gosforth workers will be offered the chance to move to Doxford Park although some of the roles will be shifted to Yorkshire.

UKAR chief executive Richard Banks said last night: “It’s been quite a difficult day so far. Our people have been taking the news with a great deal of fortitude.

“Because the business is reducing by 25% – some of the mortgages of UKAR will be up by the end of 2013 – we are going to need fewer sites. We want to encourage as many colleagues as possible to go to Doxford. We’ve got room in both the other locations for people who want to move.

“Inevitability, people’s personal circumstances over the next 18 months are going to see a reduction in numbers.”

He said it was impossible to say at this stage how people would be made redundant as a result of the move.

“It’s very, very difficult to be precise about staff numbers,” said Mr Banks. “It’s very difficult to say this equates as x-amount of job losses at some point in the future.”

He pledged that UKAR would provide a travel, relocation and disruption allowance for staff prepared to work in the Sunderland office, which is 18 miles from Gosforth, or to move to Crossflatts.

“We don’t want to lose some very highly skilled people who are working in very difficult circumstances,” he said.

“We have a very good loyal workforce which is eminently employable.”

His decision was last night criticised by the leader of Newcastle Council, Nick Forbes,. He said: “It is deeply disappointing that UKAR have taken the decision to close their Gosforth office and focus their business in Sunderland and Bradford. This business is a large employer and an important part of the city.

“We will be pressing UKAR to retain as many jobs in the North East as possible. We await to see how many staff will lose their jobs, and the council remains committed to helping UKAR and its staff find alternative employment while supporting the property market wherever possible.”

UKAR acted as its business starts to decline. It does not deal with new customers, just those loans classed as ‘toxic’ from the collapsed Northern Rock and Bradford & Bingley.

Mr Banks said: “Our job is to manage the wind down of the mortgage books. By the end of 2013 we expect the number of mortgages to have reduced by 25% since UKAR was established.

“As a consequence, we will need fewer people and it will no longer be cost effective to run the business from three sites.”

He said the decision to shut the Gosforth office was taken from a “rational commercial” and not “emotional” standpoint. Sunderland and Yorkshire were the preferred sites because they already specialise in debt management.

“Gosforth is very, very large and we are rattling around in it already,” said Mr Banks.

“The building’s main occupant is Northern Rock. Northern Rock has a lease on the building and one hopes they will stay there.

“Virgin have confirmed they will remain in the North East and are committed to growing the business.”

Sir Richard Branson’s Virgin Money last month paid £747m to buy the trading part of Northern Rock from the Government.

David Fleming, from Unite the union, said UKAR’s decision to pull out of Newcastle was a blow, coming so soon after Sir Richard’s boost for the region.

He said: “The news that UKAR is to shut down its site in Gosforth, Newcastle is devastating news for the 700 staff based there.”

Inevitability, people’s personal circumstances over the next 18 months are going to see a reduction in numbers