Virgin would cut jobs at Northern Rock

Reuters - Wednesday 6th of February 2008

Richard Branson's Virgin Group would cut jobs at Northern Rock if it ends up taking over the embattled mortgage lender, it said on Wednesday, abandoning an earlier commitment not to lay off workers.

Job losses among Northern Rock's approximately 6,000 staff would pile fresh pressure on Prime Minister Gordon Brown, who is struggling to secure a private sector rescuer for the country's biggest casualty of the global credit crisis.

The BBC reported on its website that Virgin would cut around 1,000 jobs and cited Jayne-Anne Gadhia, the head of Virgin Money who would run the bank if Branson's bid is successful, as saying that the Treasury would accept the cuts.

"We can't continue to make the promise that there will be no redundancies, but we would aim very much to minimise any reductions," Gadhia told BBC radio.

A Virgin spokesman said the estimate of 1,000 redundancies was inaccurate and the number would be less. He declined to estimate the number but said it would plan to make as many reductions as possible by not replacing staff who leave.

"A major part of this plan is about job preservation," he said.

Virgin and an in-house management team both pitched rescue offers for Northern Rock this week, but a third suitor, investment firm Olivant, quit the race on Monday saying that government demands to be repaid about 25 billion pounds in loans within three years were too onerous.

Brown, who has seen his popularity slump during the five-month crisis at Northern Rock, has said he would temporarily nationalise the bank if a private sector solution could not be reached.

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