About one-third of Northern Rock's 6,500 workforce face the axe, as the nationalised bank begins the painful process of paying back the taxpayer and complying with European state aid rules. Financial Times
Alistair Darling, chancellor, last night gave formal notification to the European Commission of his plan to continue the government’s £24bn support operation to the bank, which was on the brink of collapse last September.
The Brussels state aid authorities are expected to open a formal investigation into the restructuring aid package presented by Mr Darling, which is likely to last many months.
Neelie Kroes, EU competition commissioner, is expected to approve the state aid, but only if the bank weans itself off the taxpayer subsidy and shrinks its business to avoid distorting competition in the banking sector.
The ensuing job losses could be about 2,000 to 2,500, as the bank halves its balance sheet from its current £113bn size, dramatically curtailing its mortgage lending business. The taxpayer loan could be paid back within two to three years.