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February 6, 2008

Virgin proposes 1,000 Northern Rock job losses

by Gill Montia

Story link: Virgin proposes 1,000 Northern Rock job losses

Virgin Group is proposing to cut around 1,000 jobs at Northern Rock, should it be successful in its bid for the stricken bank.

The news contradicts an earlier pledge that there would be no job losses as a result of Virgin’s plans to merge Northern Rock with its Virgin Money business.

Jayne-Anne Ghadia, head of Virgin Money, has admitted that job cuts are now central to the success of a takeover, stating: “We can’t continue to make the promise that there will be no redundancies.”

Virgin has indicated that the Treasury’s insistence that Government backed bonds, yet to be issued by Northern Rock, must be repaid in three years means that redundancies are inevitable.

Government adviser, Goldman Sachs, has recommended the bond issue as a means of repaying Northern Rock’s debt to the Bank of England, but the original proposal allowed five years for repayment.

The change in the deadline is reported to be the main reason Olivant withdrew from the bidding earlier this week.

Northern Rock employs around 6,500 staff and the majority of job losses would be in North-East England.


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