Rock plan 'could see 1,000 jobs go'

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The BBC reported that as many as 1,000 posts could be cut from the estimated 6,250-strong workforce as Virgin bosses work to repay around £24 billion in Government loans within three years.

Sir Richard Branson's bid for Northern Rock is one of two being considered by the Treasury after they were submitted on Monday. The other is a proposal from an in-house management team at the bank.

Virgin Money boss Jayne-Anne Ghadia, who would run the bank in the event of a Virgin rescue being accepted, told BBC's Radio 4 Today programme she could not rule out redundancies.

She said: "We are confident we can make full repayment of the taxpayer in less than three years and part of the solution to that is reducing the size of the bank moving forward.

"We can't continue to make the promise that there will be no redundancies, but we would aim very much to minimise redundancies. And we have these plans, latterly, once we have repaid the Bank of England funding, that means the business will continue to grow again."

A Virgin spokesman indicated that any job losses would be "less than" 1,000, and the group would make as many reductions as possible by not replacing staff that leave.

Investment group Olivant, headed by former Abbey chief executive Luqman Arnold, pulled out of the bidding process at the last minute on Monday, saying it had failed to come up with an offer that could satisfy its investment needs, the Government's financing terms and the interests of Northern Rock stakeholders.

Virgin's plans would see Northern Rock, which employs around 5,000 people in the North East, rebranded as Virgin Bank. The group said it aimed to inject £1.25 billion of new equity into Northern Rock, with £500 million being raised through offering shareholders new shares at 25p each.

Northern Rock's management outlined a two-pronged turnaround plan for the bank, saying it would seek to raise at least £500 million, reduce the assets on Northern Rock's balance sheet and reorganise the operations. A spokesman for the team was unavailable to comment on any prospective job losses.