Virgin and Rock: Jobs to go
Virgin has abandoned its commitment that there would be no redundancies at Northern Rock in the event that its rescue plan is approved by the Treasury.
The chief executive of Virgin Money, Jayne-Anne Ghadia, told me that job losses would be greater than the group had originally anticipated because of the Treasury's insistence that taxpayer loans have to be repaid within three years.
The Government may be embarrassed by her disclosure that job losses would stem from financial conditions imposed by the Treasury.
When Sir Richard Branson announced last year that he wanted to be Northern Rock's white knight, he said he was confident there would be no redundancies at the troubled bank.
But Jayne-Ann Ghadia, who would run the Rock for him, has had to retract that.
If Virgin were to end up controlling the bank, it would reduce staff numbers by more than could be achieved through natural attrition.
She won't be precise about it, but employee numbers may come down from 6,000 to about 5,000
Her reasons are embarrassing, for the Government.
On Friday, the Treasury told all potential rescuers that up to 拢40bn of new Government-backed bonds to be issued by the Rock would have to be repaid in between one and three years.
In order to do that, any rescuer - including Virgin - would have to massively shrink the size of Virgin's mortgage book, from more than 拢100bn to about 拢60bn.
And if the bank became that much smaller, it would need fewer people to service the mortgages.
In other words, the chancellor has decided that the priority is speedy repayment of all those taxpayer loans, even if it means job losses in Newcastle.
I'm 
颁辞尘尘别苍迟蝉听听 Post your comment
The enormity of the debt can best be understood by us mere mortals when it is understood that the repayment proposals represent over one and half MILLION pounds every hour, 24 hours a day, 365 days a year for three solid years. Not really all that surprising that jobs will have to go - and I would bet on more than 1,000.
Dear Mr Peston
Do you get some perverse pleasure in reporting news such as this ? On what basis do you get a figure of 5000 ? It would nice to see you back up this figure with some hard facts rather than reporting your thoughts as if they are the truth, after all you were misguided by Olivants intent! Please bear in mind that wide of the mark reporting has a human implication or do you have no morals in this respect.
91热爆 Website Reports:- "But Virgin Money boss Jayne-Anne Ghadia, who would run Northern Rock in the event a Virgin rescue was accepted by the Treasury, has told the 91热爆 that job losses would be greater than originally anticipated"
Greater than originally anticipated !! And Mr Branson said there would be NO redundancies.
Virgin see an opportunity and they will seize it - they are no running a charity - it is just like watching Mr Potter in the film "It's a Wonderful Life"
NuLabour & Virgin - excellent bed fellows !!! - Spin & Lies go hand in hand !!!
Job losses were inevitable at Northern Rock once management tried to run against the tide. Any plans to run the NR as an ongoing business will soak up cash and NR assets will need to be realised and jobs pruned. If it had been any other business outside of banking even more job losses would have occurred and more quickly.The longer this debacle runs the more my thinking is that NR should have been left to the liquidators. Jobs will be lost in considerable numbers which ever route is followed now. Eddy Weatherill, chief executive, Independent Banking Advisory Service (IBAS)
I am a NR employee and I am extremely scared about these job losses and have been for the past 6 months but do not want to leave the company as they are excellant employers.
When will the City and Government learn about Branson's "promises"? From cleaning up Trafalgar Square to putting the Union Flag on Virgin's tailplanes, once the publicity has been generated, the substance of the promise evaporates as quickly as he can jump off the bandwaggon he has set rolling. It will be the same at Northern Rock. Jobs will go, probably rightly, the Government will not get its money back in full and the only person left smiling will be the awful "grinning pully".
Once again, honest workers are treated badly, in order to save the money invested by shareholders who, after all, new in advance that shares can go down as well as up.
Let's hope the cuts first fall on the senior people who dreamt up the stupid idea to fund their long term lending by borrowing short term. And, IMHO there should be no large pay-offs for these people.
This is the start of Berdie working his way out of the offer. He can't make the deal work, so is putting a spin on the fact and making it seem like if it weren't for the government, Britian's favourite businessman would save the day.
Good luck the staff of NR - you have my sympathy.
I feel very sorry for NR staff who lose their jobs because of this but please target those that are to blame - NR senior managers and politicians (not to mention the FSA). When will Adam Applegarth be held to account for what he has done ?
I'm disappointed to read that jobs are at risk, but on what do you base your figure of 1000 job losses? You say yourself that Jane Anne Ghadia hasn't been precise about it, so where has your information come from for you to be so exact?
While you may defend your right to report every scrap of information you receive, please understand that without the evidence to support these 'facts' all you are doing is causing panic amongst the hard-working staff at Northern Rock who have stuck by their employer and continued to do their jobs throughout this 'crisis'.
With the massive losses suffered by most of the banks, UK and international, it will not just be Northern Rock who will by laying off staff.
Firstly Robert belated welcome to your new post. Second point is a question inspired by this NR report. Why are you always so negative about the Government? (abso no axe to grind here.) Firstly we heard how HMG had made a 'disaster' by not selling NR to LTSB - debateable in my view as it was only the opening moves by LTSB and before more serious 'credit crunch ' revelations. And today's news that the atrocious/irresponsible conduct of NR may, indirectly, eventually lead to some job losses is blamed, by you, on the Government...Didn't they, via the taxpayer, rescue the bank (thus saving ALL the jobs?). That NR now has to suffer from the antics of the previous owners is not something that the government should be blamed for. Seems to me HMG are serving the interests of us, the taxpayer..
Ease off the government Robert (unless clearly deserved), makes you seem partisan and lacking objectivity.
Tony, post 8, yes most of the current senior management will go if Virgin take control but they will all no doubt go with big redundancy pay offs.
It is only the poor wage slaves at the bottom who will be lucky to get statutory minimum redundancy pay. Those at the top will do nicely thank you very much!
where is the balanced view?????
what about the alternative option?
yesterday a staff memo from the management board also talked of job cuts, though it was non-specific and used language like "we will try to minimise the impact"... "consult with the unions" etc
so where is your mole regarding the management takeover option?
we know there will be "restructuring" but where does the 1,000 come from?
another speculative, unhelpful piece, you must really have it in for us... please, please come and visit...
This is not a problem for Virgin only. The other options - self help & nationalisation will also result in job losses. Andy Kuipers tried to gloss over this by referring to them as 'job pressures' yesterday.
The reason being that the government wants it's money back and it is forcing the company to make that repayment it's top priority.
As a taxpayer, I wholeheartedly agree with this approach.
As an NR employee it is worrying - but is there really such a thing as job security anymore?
I hope you are happy with yourself. Vince Cable and yourself have sensationalised this story and cherry picked bad news and misrepresented figures to the extent that the government only cares about getting its money back and stopping the negative press.
The affect of this is that the best candidate to run the bank has dropped out its interest and the bank will no longer trade as a going concern but instead be run for the sole purpose of getting the governments money back. This is a risky strategy which runs the biggest risk of the bank failing and the taxpayer losing money.
Just to set the record straight for a few people who continue to slag off NR staff and seem happy about people losing their jobs. The staff at NR are honest, ordinary, hardworking people and taxpayers/shareholders too as everyone keeps going on about it.
As in all situations like this, it's the ordinary hardworking people at the bottom who pay the penalty for other people's mistakes. You might want to think about that when we lose our jobs and the government get's their money back.
I think its time for a reality check. The Northern Rock business model failed 鈥 in the normal course of events the business would have gone into administration and many employees would have (unfortunately) lost their jobs. The government then steps in and supports the business with a vast amount of tax payers money 鈥 which it now wants back 鈥 not unreasonably; the result is that the business will need to be downsized and many people will lose their jobs, though nothing like as many if the government hadn't supported the business. This is the hard reality of the commercial world.
Who else can remember when the television news had league tables of job losses?
Every night for weeks on end.
If NR had gone to the wall as it should have done then many, many more jobs would have gone. Just because NR is in a Labour stronghold should not make them immune to business realities.
Everyone knew there would have to be job loses... its more evidence that Branson will say what he knows will please people and he then worries about the details later.
I am extremely sad a third option in Olivant no longer exists as now feel the future for NR is bleaker than ever. Why should people think Jayne-Anne is capable of running a company as big as NR compared to Virgin Money- lets look at some perspective- Pre Septmeber Virgin Money is worth what 拢200m and NR, what, 拢6BN!!! Who thinks that running the former will be anything on the scale of NR! I for one dont and think it will be doomed from the beginning!
To be perfectly honest, I think it is fair to blame the Government this time. First, they decide that they'll use taxpayer money to prop-up the bank and then decide that whoever takes over the bank has only 3 years to clean up the massive mess that the government created and because of that jobs have to be cut.
I think in any take over situation there will always be people that go, but I suppose that can't really be helped. As a few people have already said, it would have happened to anyone who took over the bank, not just Virgin. And if I remember correctly Mr Branson said that they would try to keep job losses at a minimum, not rule them out completely.
And to everyone who keeps going on about "How can you justify 1000 job losses?!", the answer is, in estimate they're cutting their mortgage book nearly in two from 拢100bn to 拢60bn, logic says that the same ratio of jobs will be axed, so to be perfectly honest, 5000 is quite optimistic.
I will feel very sorry for anyone of the lower workers in NR that lose their jobs, however as NR should have gone bust by now they are lucky that taxpayers money has saved those jobs that will remain, and that huge debt needs repaying - fast! I do think that Adam Applegarth needs to be held legally accountable and his assets seized!
Letter 13 hasn't understood that the government has screwed up on the NR issue.
First by not doing a deal withg Lloyds TSB then phaffing around abusing Taxpayers money supporting an indefensible situation. i.e a bank who's borrowing and lending policy was based in cloud cuckoo land.
Second they set another principle of supporting a company that had no justification to be supported an committing to banks support that no other industry sector or company will have teh benefit of - unless the local MP are members of the Labour party!
Third they have employed Goldman Sachs to do the job the Bank of England is perfectly capable of doing for no fee!.
Forth they appear to have let off scot free the incompetance of the FSA in its whole approach to this issue and the directors of NR who literally should be accused of corporate manslaughter of a company.
Fifth it is now literally gifting NR to whoever looks likely to be bothered because the reality of its own over spend and the likelyhood of the guarantee of NR bonds would be seen as a government subsidy by Europe not to mention the National Audit Office questioning where the debt would be, has driven them to panic getting the money back on the balance sheet before the Budget in some form or another
The government has not just blown it's so called reputation wide open it has decimated its reputation through its continuous policy of mirrors and illusions of prudence and good fiscal management, and left the taxpoayers of this Country with a penalty that will cost years of unnecessary misery for them all.
Finally it is bizarre that the official Opposition to the government appears to be the press and members of the Public.
What has happened to the Shadow Chancellors and other MP's, or do their own personal accounts and reporting thereof mean more than sorting out the NR fiasco.
NR shrinks its mortgage book to free up capital in order to repay government loan. Other mortgage companies take on the mortgages and increase the number of mortgages serviced. Staff move from NR call centre in North East to competitor call centre in the North East. What's the problem?
One factor that people always miss in the VM/NR "takeover" is that there is an existing Virgin Money business, based in Norwich, that would almost certainly be adversely affected if the deal was to go through.
As these voters are not in the Labour heartland, one assumes that no one will worry whether they all lose their jobs as a consequence of this deal.
"In order to do that, any rescuer - including Virgin - would have to massively shrink the size of Virgin's mortgage book, from more than 拢100bn to about 拢60bn."
Shouldn't that be 'Northern Rock's mortgage book' or does Robert know more that he's telling us?
Ben # 22
I couldn't agree more. And I might add some questions.
1. What can anyone do if Virgin win and in 2.5 years time just say that paying back the loan will take longer than expected?
2. Even after all thats happened, Northern Rock's deposit base is still an enormous multiple of the entire business carried out by Virgin Money. Does this not say anything about the relative value of the two brands?
3. Many people have a lot of respect for the Northern Rock brand and its community links. Would Newcastle FC be the same if they were renamed Super Geordies and wore red?
The blame for this fiasco is in Downing Street, now at No 10.
By creating a era of 'cheap money' and rocketing house prices without having in place a solid regulatory framework for banks Brown showed that he'd learned no lessons from the Secondary Banking crisis of the 1970s. Cable I sense had.
Once Northern Rocks position, a hostage to fortune if there ever was one, was discovered in the summer the bank should have been placed in administration with the State paying out on the deposit insurance plan, the mortgage securities seized and sufficiently liquidated so the basic bank might have been able to be sold on plus staff as a functioning concern.
In the meantime Branson has had a lot of free publicity at the Government's expense, he's an expert at that- Lottery?-; Brown has had to 'bottle' an election.
The Government should sell the mortgages as securities as 10 -30 year instuments which it guarentees in whole or part for their duration. It doesn't want to do that it seems and it would seem between it and it's advisors they've little clue.
Remember: the first cut is the cheapest.
Sad news for the employees but as always the shop floor workers have to pay the price for incompetent senior management. After all, they only had to face the customers. Unfortunately they won't the last to pay for other people's mistakes.
Re comment 20 - I remember this from News at 10 every week. Companies always like to cut jobs in big round numbers and trumpet cuts loudly so that make them look decisive and in control so it's easy for journalists to report.
Of course, when companies add jobs - it hardly ever is reported. Job creation is always viewed ambivalently by the City analysts so there is generally less fanfare. One of the car manufacturers IN THE N.E. created more jobs in recent weeks but it didn't register. One would think the stock market only ever went down as that's the only thing reported on 91热爆 News - Robert Peston is always wheeled in but never seems to be around when it goes back up. Oil only ever goes up in price too apparently.
It's not that we ought to pretend that nothing bad in the economy has happened but the one way barrage of bad news with little attempt at balance in the last few months has damaged consumer confidence and a recession is much more likely now than it should have been.
There could be an even greater scandal brewing for the Labour Government...
Remember how all this started with the credit crunch ...poor quality or bad mortgage US sub - prime debt parceled up as "solid " debt and flogged off around the world . Credit Rating agencies in the US "signed this off as solid" so it could be sold accordingly.
However it would appear that the " independant " Credit rating agencies are actually owned/ influenced by some of the Banks who sold the sub- prime rubbish. Also some Banks have made a fortune by them betting in favour or "shorting " the market.
Apparently the FBI in the US has opened fraud investigations into these Banks in the US.
Who is under investigation well no other than Goldman Sachs among others.
Who is the Government adviser on the rescue of Northern Rock from this sub -prime credit crunch...
Yes, you guessed ... Goldman Sachs....
Of course it could all be a misunderstanding on my part...
No Comment , Robert??????
Well Robert, here you go again spreading more stories of doom and gloom about job losses for all of us hard working and dedicated NR employees. Don鈥檛 you ever get sick of talking about NR, because we certainly get sick of hearing you?
It does beg the question however, just why do the powers that be want to talk to or give you access to 鈥渇acts and figures鈥 when Virgin or anyone else for that matter, cannot or is not able to release the information, it certainly can鈥檛 be because you鈥檒l give an unbiased viewpoint.
If it hadn鈥檛 been for NR, I wonder just what you would done in the last 6 months, maybe you鈥檇 have been one of those unlucky 91热爆 employees who was 鈥渟urplus to requirements鈥 and then maybe, just maybe, you鈥檇 have understood what it鈥檚 like to have someone kick you when you鈥檙e feeling very vulnerable and down.
People in the North East are very proud of their roots and the majority of NR employees are very proud of the company they work for, so watch this space and to put a spin on a phrase from Arnold Schwarzenegger, 鈥淲e鈥檒l be back鈥
Aren't all NR employees effectively civil servants now anyway?
when will the bbc realise northern rock also has a major processing and call center based in doxford park in sunderland, as well as smaller centers in several other major cities aswell as the branch network?
we get sick of reading how newcastle will be badly effected by the job losses - there are far more staff work outside of newcastle than work in it....
hex
no such things as a job for life anymore. bite the bullet and move on. everyone else does.
While all the comments have been about depositors and shareholders money, nothing has been said about the people who have mortgages witht he rock. do these people still keep the fixed rate deals that have been entered into? what happens to them are these morgages going to be sold of in the bonds?
Robert, why are you so sure that NR need to shrink their mortgage book to 60 billions? Let's state the facts. NR will borrow money from the market, not from the Treasury. When the market recovers, there will always be the possibility to replace government guarantee by another commercial banks or monolines.
NR buisiness does not have to shrink at all if handled well.
This is very unfortunate - however managers who indulge in re-mortgage and other risky financial businesses should be prosecuted.
A few remarks:
1. There were always going to be job losses whoever took the Rock over. To be fair to Virgin, when they first said they were interested they said there would be a few redundancies, largely concentrated in the upper management echelons.
2. If you change the timescale on any large debt from five years to three years, that will inevitably have a serious impact on your plans going forward. By doing this (and partly caving in to pressure from the likes of Mr Peston et al ceaselessly ramping up the '拢40bn of taxpayers' money is at risk' line) the Government is saying 'pay up ASAP and then we'll leave you to pick up the pieces'.
3. The easiest way to pay back the Govt in shorter order is to sell large swathes of the mortgage book. Sadly, this means that jobs attached to those parts are likely to go, through absolutely no fault of the hard-working people affected. This is particularly sad since the Rock is a big employer up here in the NE and a big contributor to various charitable and community organisations. Hopefully, once the Govt has been paid off and more reliable funding streams can be established, the business can grow once again.
4. The idea that the Govt is helping NR because the North-East is a Labour stronghold is total and utter rubbish, spouted only by ill-informed fools in the south. For starters, Newcastle has a Lib Dem council and, more fundamentally, if Newcastle and the North-East is a Labour stronghold, the Govt doesn't have to worry about courting votes up here. In fact, if more parts of the region were less loyal to Labour and were prepared to be more marginal, more politicians of all parties might pay us a bit more attention and give us a better deal on things like transport, funding, infrastructure, etc. Something tells me that if Rover, for example, had been in the North-East, it would never have lasted as a lame duck until 2005. Instead we have Nissan - a highly profitable company - which announced an extra 1,200 jobs to be created at its Sunderland plant last week.
Yes it's a personal tragedy for employees, but unfortunately their employer has just gone bust (in case anyone didn't notice the queues of people in their high street). Therefore most of them must be doing unnecessary jobs - because NR certainly isn't writing many mortgages these days (see www.northernrock.co.uk and try finding a competitive rate there). Sure some jobs will still be needed, but definitely a lot won't be.
The proof of this is NR employees posting on this forum during the course of their working day. Unless they're in the PR/Marketing/Communications teams (who are paid to put a positive spin on things) surely this just shows they're not working that hard?
1000 job losses is quite an optimstic figure and judging by the fact that by 1pm on a thusday afternoon, the local job paper is sold out in both of the NR shops on site, the staff are preparing for the worst. Unless they are part of the workforce that is putting their fingers in their ears and ignoring all of your biased comments. Even the standalone propsal from NR own board is suggesting that we go back to 2002 before the growth of the Mortgage book. That could see half of the workforce gone.
Just had to post to correct something i keep seeing people misunderstand. There is a difference between job losses and redundancy. Branston as i understand it originaly said there would be no redundancies. This likely means he knew the company would down size but could lose those jobs through what's called natural wastage, ie not replacing people when they leave/retire etc. Now he's saying that natural wastage will not cover the required losses so redundancies will likely be required.
Everyone should try not to be so quick to pre-judge and take a negative line. I swear no more than about 20% of posters here show an open mind, the rest just twist things to their preconceived opinion.
It's hard to understand how a government that has been so good on spin has let the plate drop where NR is concerned. Pretty much all of the 6,000 jobs would have gone if the Treasury had not stepped in, and the NR employees seem to be blaming the government if 1,000 jobs go. That's a net gain of 5,000.
I think the problem with the PR here is that the government is operating outside its area and is being steered by events.
Some of the comments on this page are comical.
Posting comments on Robert Preston as if he was personally responsible for the situation! So - NR employees - he has found out some info about the VB bid, has reported on it - and you are upset at him? Go figure?!
Couple of comment:
1. Ben (22) - well Jayne-Ann can't exactly do a worse job than those in charge when the business was worth 拢6bn!
2. Make no mistake - whoever wins (VB, Management, or the Government (nationalisation)) will result in significant job loses.
Re: Chris S (26)
How kind of you to assume that the NR staff in the North East are only of use for call centre work!
The Northern Rock loan book may not be worth as much as the initial valuations anyway. Falling house prices and the start of the emergence of UK Subprime slime (we have 3x the subprime of the US) means that Branson is merely playing it safe by getting rid of some of the employees.
Surely the longer this pantomime drags on, the more Virgin (or A N Other) can shake their corporate heads, suck through their teeth and say that the 'situation is now worse than it was a few months ago'...
I just have this nagging feeling that NR is going to finish up being nationalised....
I dare say that the 1000 or so redundant NRK employees will join the other half of the people employed by HMG in the Newcastle area at the taxpayers' expense.
There are only 25 jobs that count in all this!
The 23 out of 25 MP's in the North East that are Labour and Gordon Brown's and Alistair Darling's.
Post 40 these 23 seats could well be the difference between Gordon being in no 10 and yesterday's man after the next election that is why this is critical to him.
I would like to now post a simple question.
Compare the actions over the last six months of this new labour government over a small provincial bank employing 0.02% of the UK working population and their actions when Tata Motors decide to close one of the three Land Rover & Jaguar factories all of which employ more than NR when they buy them from Ford?
Then we will see whether jobs in Birmingham and Liverpool count as much those in newcastle and Sunderland.
According to todays Daily Mail(6th Feb) "Olivant has agreed to meet with Treasury officials to see whether a bid can be resurrected for Northern Rock".
Obviously this is the peoples preferred bid and every effort should be made to find out why the goalposts were changed at last minute.
Lets have some positive reporting not guesswork.
Poster #38. Northern Rocks business plan relys to much on borrowing money from the markets. It needs to cut its reliance drastically as it is far to exposed,it's likely sooner or later the goverment or the FSA will impose a cap on how much money banks can borrow relative to savers deposits to stop such a scenario happening again. And with the strict repayment schedule it doesn't give Virgin much room to do anything either. Hopefully as few jobs as possible are cut and that they find new employment.
I'm always bemused at the relentlessly negative tone of Robert's posts on the issue of NR.
In most cases of a company collapsing - which despite what some like to think NR has - any Government would have been lauded for saving 5/6 of the jobs.
Had the Tories saves 5 out of every 6 jobs at Leyland or Labour done so at Rover people no-one would have called it a failure.
As for:
"the chancellor has decided that the priority is speedy repayment of all those taxpayer loans"
hasn't he been attacked for months for appearing to do the opposite?
To be perfectly honest, I think it is fair to blame the Government this time. First, they decide that they'll use taxpayer money to prop-up the bank and then decide that whoever takes over the bank has only 3 years to clean up the massive mess that the government created and because of that jobs have to be cut.
I think in any take over situation there will always be people that go, but I suppose that can't really be helped. As a few people have already said, it would have happened to anyone who took over the bank, not just Virgin. And if I remember correctly Mr Branson said that they would try to keep job losses at a minimum, not rule them out completely.
And to everyone who keeps going on about "How can you justify 1000 job losses?!", the answer is, in estimate they're cutting their mortgage book nearly in two from 拢100bn to 拢60bn, logic says that the same ratio of jobs will be axed, so to be perfectly honest, 5000 is quite optimistic.
Re 45. I don't think Robert is personally responsible for the mess that Northern Rock got into in the first place but he certainly didn't help to stop the run on the bank either nor has he done anything for general confidence in the economy in recent weeks.
I'm beginning to be quite grateful that he continues to be fixated by NR (although I feel sorry for the staff - I can't see him getting a warm welcome in the Toon) but at least while he's concentrating on NR, he's not causing problems at some other unfortunate company.
Robert
Please tell us where you get the lay off figure of 1,000 employees?
As a taxpayer, shareholder & dare I say... employee I would be very interested in you actually answering the question posed by many previous comments.
Im well aware that lay offs could/probably will occur however as ever you report dramtic headlines without publishing any hard facts to support... please share these with the rest of us...
Chris (26)- Im not a call centre member of staff neither are about 4,500 staff
To all the prople posting on this and other blogs with the opinion that job losses are 'par for the course', 'part of business' and down to 'the market' and should therefore be accepted blindly an inevitability - shame on you.
I'm a taxpayer, and I have not beed affected in the slightest by the Rock situation - but I bet the staff working there have been through the mill. As idealistic as this sounds, you are talking about people's lives, livelihoods and careers here and you could show some compassion, as anybody would expect were it their own jobs on the line. Act like humans and show some damned sympathy - there is more to life than market conditions and balance sheets.
That ordinary working people at any company, NR or otherwise, should suffer because of cowardly investors in the money markets (who will get rich whether their investments pay off this time or next) clamming up some farcical system of debt transferrence, is a shameful indictment of the financial system. Excaserbated by politics, tabloid hacks (Robert...) and oh-so-smug blog commentators: our financial system simply does not work.
In this instance, 6000 people, most of whom work hard and do a good job, are suffering through the incompetency and procrastination of others - the least you can offer is your sympathy - you would expect the same.
The market is nothing compared to a person having to worry about feeding their family.
In response to Simon Clemmitt's comments (post #2), had the property market not been ramped by reckless, greedy vested interests over the last 10 years the UK would not be staring at the very deep abyss its about to freefall into.
I don't remember anyone who, like me, rejected the dangerous property exuberance of the last decade ever being given a platform in the mainstream media during that time.
Robert Peston is doing sterling work telling it like it is and more power to him. The tragedy for Britain is not that Peston says what he says, its that he and other sober, analytical minds were sidelined as long as they were. And now its way too late to heed their warnings.
Horse, stable door. You make the sentence.
I'm sorry to sound nasty but did nr staff not question how they were able to sustain there business before this all happened.
I work for a retail bank and know if you offer market leading deposit rates there can be little or no profit there.
In the same way why did nr underwriters not question lending criteria for high risk lending. Ie 125% loans. Or rates others couldn't match.
Yes i appreciate that you may now lord your job but you should have been asking questions and reviewing your options long before now and you have been paid a bonus for loyalty which any other business would not.
As said long before now nr is dead and its just birds circling a carcass now. Other finance companies are recruiting in the uk you may just have to accept different terms etc.
Post 58.
It is not the scale of job losses 1/6th it is the scale of public money.
What the management did at Northern Wreck was pre-school economic suicide.
They perceived no possibility of a down turn in the availability of short term cheap funding on World money markets, and they did not back up their loan book with deposits as a traditional bank would.
Since they refused to be a traditional bank by operating like one, they are now a bankrupt bank.
The gaul of this government to spend so much of 'our' money propping up a private failed business is scandalous and they will suffer at the polls for their cavalier attitude to public funds.
Seem to be a lot of NR employees on here commenting in work time...
Have you read the 'Use of Internet at Work' policy?
...you'll be the first against the wall in the job cuts...
just joking...
But for those worried about job cuts, get a grip... there've been staff leaving en force since Black Friday (Sep 14th) so surely not many more needed to be cut.
Even so, there are plenty of older staff who would be hanging on specifially for redundancy money as it would/could grant them an early retirement...
(PS: I'm on a half-day...)
NR has been the channel through which the BofE has pumped 拢100bn into supporting the UK's financial industry, i.e freeing up cash the other banks had lent to NR to put on their own books.
Which ever spreadsheet column you put a 拢100bn into, its large and if not had been done ALL of us would be in a very very big mess.
Without this support more then a few thousand at NR would be lossing their jobs.
62 Neil
What makes you think that the BoE's support of NR has had a knock on effect of just supporting other UK banks and institutions?
It is more than likely that the loans NR got from their securitization operation were from foreign banks etc.
We have been supporting the global markets by ensuring the timely repayment of loans as they fell due.
How they must have chuckled..
To all the prople posting on this and other blogs with the opinion that job losses are 'par for the course', 'part of business' and down to 'the market' and should therefore be accepted blindly an inevitability - shame on you.
I'm a taxpayer, and I have not beed affected in the slightest by the Rock situation - but I bet the staff working there have been through the mill. As idealistic as this sounds, you are talking about people's lives, livelihoods and careers here and you could show some compassion, as anybody would expect were it their own jobs on the line. Act like humans and show some damned sympathy - there is more to life than market conditions and balance sheets.
That ordinary working people at any company, NR or otherwise, should suffer because of cowardly investors in the money markets (who will get rich whether their investments pay off this time or next) clamming up some farcical system of debt transferrence, is a shameful indictment of the financial system. Excaserbated by politics, tabloid hacks (Robert...) and oh-so-smug blog commentators: our financial system simply does not work.
In this instance, 6000 people, most of whom work hard and do a good job, are suffering through the incompetency and procrastination of others - the least you can offer is your sympathy - you would expect the same.
The market is nothing compared to a person having to worry about feeding their family.
Dear Robert
As you clearly know so much about Northern Rock, maybe you and the ill informed others may like to take a little quiz ?
I laugh when I read some of the comments such as "why did nr underwriters not question lending criteria for high risk lending. Ie 125% loans" etc etc
1) Please do explain where the "1000 redundancies" figure is arrived at.
2)What what the average % Loan to Value of Northern Rock's Mortgage book prior to September
3)What sum in total would Northern Rock lend to a customer on a Together 125% Mortgage with the property valued at 拢400,000
4)What proportion of the Industry average for arrears was NR's mortgage book running at prior to September
I ask these questions so people will at least re-think what they believe they know about the present situation. Granted, the Model was flawed but it was a transparent Model and all the Regulatory Authorities were aware of it.
Enjoy....
I am not as naive to blame Robert 'the pest' Peston for the Northern Rock Crisis.... the Board and the Government deserve most of the blame there.
What really frustrates and disgusts me is the way this has turned into some sick tabloid type story where all types of 'mostly untrue' dirt is dug up.
I am a member of staff, and am not a call centre agent (not that there would be anything wrong with that, they do a fantastic job...especially with all this rubbush going on).
My point is what right do all of you people who speak of the staff and the situation we are in with distaste and in such an insensitive way.
I hope when your jobs are on the line you are treated with a bit more respect.
Peston...come up to Newcastle!!! Shame we didn't see you at the EGM or didn't your mole invite you!
For all of the sad people who have nothing better to do then winge about loosing money on there shares if Richard Branson does get hold of the business I hope that he get's an aggresive take over and you get nothing for them!! This gut has spotted a business opportunity and wants to grab it with both hands and while he's there stop 6000 people's lives from being ruined !! You take a gamble with share you lost deal with it and move on ! I just hope that when it comes to the crunch the share holders think with there head's and not there wallets as if the bank does get nationalised you will end up with a big fat 拢0 !! Personally I will welcome Virgin with open arms as there is easily a way of disposing of a 1000 staff we can start with the overpaid directors and manager's who do nothing!
I bought a house for the first time last year, and Northern Rock came through for me when no other company would lend me the money. Maybe I was considered 'sub-prime' then, but since I've had a considerable rise in income and am much better off.
I'm sorry that NR employees will be losing their jobs over this, and feel it's entirely the media's fault that all this happened in the first place. If the news hadn't latched onto this and milked it for all it was worth, it never would have developed like this.
Post 60.
You're refering to the wrong post.
Brian Anderson post 18
Hey Brian RobertP and Vince Cable didn't manage the business into bankruptcy!
Why kill the courier?
Just like to hear good news then?
NR Crap business plan AND if we had a gov't with spheroids they would have let it go bust and stuff the shareholders (who got the profits if any) and not the taxpayer who got non of any upsides.
All about ego.
Just what makes this bunch different than a motorcycle factory, a car plant or a cotton mill?
Capitalism works by having some failures, not making crutches for lame ducks
Job losses are probably inevitable but there is one sickening aspect of this.
Retention bonus' totalled roughly 拢2.2million.
The base Clerical member of staff is on 拢14,905
Thats 147 staff that could have been kept in a job for a year if these ridiculous bonus' weren't paid.
They should be ashamed.
Regarding Post number 4 from Eddy Weatherill, chief executive, Independent Banking Advisory Service (IBAS)
How any body who says he advises on banking saying liquidating a bank would have been the best option is beyond me as although i only know a tiny bit about banking i do know they are all linked like a deck of cards pull one card out (N/Rock) then Confidence in the entire sector (the rest of the pile) gets very shakey and can fall at anytime any sniff of another bank having a problem would lead to a run on that one then the next one so on and so on through out the sector
Could I ask my NR colleagues to check their grammar and spelling before posting. You are making us look like a bunch of illiterate geordies! Ask someone if you are not sure of the difference between 'their' and 'there'.
Also, when our own troops talk about sacking a/d and senior management grades as part of Bransons staff decimation, and complain about the incentive payments to retain key senior staff, this fails to recognise that a number of us came from the call centres and branch, not out of Universities. You should celebrate an organisation that supports promotion in this way.
Come on guys and gals: Rock Steady!
I am upset by a few people's comments. I thank everyone for sympathising with the NR staff and the security of our jobs. HEM #41. You seem to be quick calling the staff and how hard working we are. You think that because we are posting we are not working hard. I can assure you we are. We are entitled to breaks, lunches. We even get to go home at the end of our shift. We also have days off too. What is your excuse for posting during normal working hours, have you no work to do, or do you even have a job??? We can't blame any one person for this mess, it has been everyone. But the media did not help and are in part responsible for job losses. When NR get sorted I hope you make a huge song and dance about it like you did back in september. ROCK STEADY.
post 73
Also an employee.
I have one think to say in response to presumably a senior manager - Dream On!
I won't be getting a massive redundancy payout when the inevitable happens unlike your beloved senior management. I have expected redundancies since the beginning of this mess. It does amaze me the number of my colleagues who have refused to acknowledge the fact that if you're doing less business & repaying huge debts that jobs have to go. I do blame the directors and senior management for the situation and nothing anyone says can make me think otherwise. The members of the board at the time should be subject to some form of investigation and hopefully custodial/monetary punishment.