Northern Rock slashes 680 jobs

Nationalised lender Northern Rock plc has revealed it is to cut up to 680 jobs by the end of 2011 in an attempt to rein in its costs in "very challenging" trading conditions.

It says job losses would affect employees "at all grades across the company", but adds it hopes to minimise compulsory redundancies.

The restructuring comes after Northern Rock announced earlier this month that it made a £232m loss in 2010.

It says it entered 2011 with a "high retained cost base", following the separation of ‘good bank' Northern Rock plc from ‘bad bank' Northern Rock Asset Management.

The job losses are intended to improve the lender's operational efficiency and bring employee numbers in line with its medium-growth expectations, as it prepares to return to the private sector.

Northern Rock has now entered formal consultation with Unite and employee representatives. Voluntary redundancy will be offered where possible, it says.

In a statement, Ron Sandler, executive chairman of Northern Rock, says: "Economic and trading conditions remain very challenging for a bank like Northern Rock.

"The mortgage market remains subdued and the low interest rate environment continues to act as a headwind for banks and building societies primarily funded from retail savings.

"In order to meet our agreed objectives, we must continue to manage our cost base, which is too big relative to the size of the company - regrettably, this will involve job losses."