Rock staff could be losers whoever wins bid battle

Feb 1 2008 By Andrew Mernin

THE jobs of Northern Rock staff were under new threat last night as reports surfaced of potential redundancies – whoever takes over the bank.

On the day that Sir Richard Branson’s Virgin Group confirmed it will lodge its bid for the troubled bank, there were reports that all three main bidders would be submitting “risk-averse” business plans that would build in job losses. The Rock employs 6,500 people, though there has been a recruitment freeze since September.

None of the new bidders are likely to pursue the same kind of aggressive hunt for a share of the mortgage market that Northern Rock was implementing prior to its troubles. If they were to do so, rival banks would be likely to complain, given that Northern Rock has only been kept afloat by the Bank of England’s £28bn loan.

The Virgin consortium said it was hammering out the final details of its offer for the crisis-hit lender in time for the February 4 deadline.

Chancellor Alistair Darling gave Northern Rock’s suitors until next week to come up with their definitive offers after announcing a financial package to smooth the path for a private sector sale earlier this month.

There are believed to be only three contenders to rescue the stricken Newcastle lender – the
Virgin team, investment group Olivant and the bank’s own management.

But it is believed Northern Rock bosses, who are putting together proposals for a “self-help” option, are struggling to raise the necessary capital.

Northern Rock declined to comment on its proposal ahead of the deadline. Olivant also remained tight-lipped on its plans, although it is thought the group – headed by former Abbey chief Luqman Arnold – is also intending to meet the Monday deadline.