Virgin Money has made a volte-face on Sir Richard Branson's promise to preserve "99 per cent" of Northern Rock's jobs, admitting it will have to make redundancies to meet the Government's three-year repayment strategy.

Jayne-Anne Gadhia, the chief executive of Virgin Money, told the BBC's Today Programme: "We can't continue to make the promise that there will be no redundancies but we would aim very much to minimise any reductions."

Less than four months ago, Sir Richard told Northern Rock workers: "We wouldn't have got involved with this rescue unless staff saw us as a saviour. Of the 6,000 people who work for the bank, 99 per cent will keep their jobs."

However, this morning Ms Gadhia conceded that if its bid to takeover Northern Rock won out against a management-led proposal, jobs cuts would have to be made.

A spokesman for Virgin Money denied reports redundancies would cost 1,000 jobs. He said: "It will be nothing like 1,000 jobs. We have not got numbers of kind at the moment. We hope they will be minimal."

The Treasury has told bidders they will have to repay £40 billion worth of Government-backed bonds within one to three years.

Ms Gadhia said: "The Government financing plan means that anybody that's taking the bank forward needs to think very carefully about how quickly they can repay the taxpayer.

"We are very confident that we can make full payment to the taxpayer within three years and part of the solution to that ... is reducing the size of the bank going forward."

Virgin Money was not available for comment.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive