Unions respond to Rock job cuts

The group is set to cut a third of its workforce of just over 6,000 under proposals to halve the size of the firm and pay back around £25 billion in Bank of England loans racked up since its crisis last September.

Executive chairman Ron Sandler said any job losses were "extremely regrettable", but did not rule out compulsory redundancies. Most of the cuts will come this year, striking a blow to the Newcastle-based lender's north-east heartlands.

Union leaders said the news would cause further uncertainty for the workforce and would oppose any compulsory redundancies.

Graham Goddard, deputy general secretary of Unite, said: "The employees have already faced months of insecurity and anxiety about their future. We will be working to mitigate the implications of the recent crisis on the employees who have worked tirelessly to ensure there is a sustainable business in the future."

But Mr Sandler said: "This is not just about shedding jobs, this is about preserving Northern Rock as a viable financial institution capable of being returned to the private sector."

Chancellor Alistair Darling gave the European Commission formal notice of its continued support to Northern Rock, which could face an investigation for breaching rules on state aid. A Commission spokesman said: "To be viable without state guarantees it is clear the bank must shrink."

A task force set up to help workers facing the axe has also held its first meeting. The Northern Rock Response Group - led by regional development agency One NorthEast chief executive Alan Clarke - is confident that Northern Rock's staff can help fill an estimated 21,000 vacancies in the region.

He said: "The North East economy is far more resilient than in the past to absorb such economic blows and its broader business base offers new opportunities and hope for these workers."

As well as the job cuts, Northern Rock plans to shrink the size of its mortgage book to around half the current level of around £110 billion in a bid to create a smaller business, focused on low-risk mortgage lending and building up savings deposits. It aims to pay off the Bank loans and free the Government from its guarantees over the business within three to four years before a return to the private sector.