As many as 2,400 jobs could be cut from Northern Rock over the next three years, the troubled bank’s managers said yesterday, as they outlined their plan to rescue the Rock.

Paul Thompson, who, as leader of the management buyout team, is going head-to-head with Sir Richard Branson for control of the Newcastle-based bank, refused to rule out redundancies.

Mr Thompson’s comments came as the Virgin-led consortium denied reports that it planned to lose 1,000 of the Rock’s 6,250 staff. Virgin and the existing management team submitted offers for the bank to the Treasury this week.

The management team began publicising its bid yesterday, and immediately received a boost from Northern Rock’s two biggest shareholders, SRM Global and RAB Capital, which increased their stakes. RAB Capital, the hedge fund manager, bought an additional 450,000 shares, taking its stake to almost 8 per cent, and reiterated its support for Mr Thompson’s bid.

The 45-year-old career banker, who is best known for turning around Britannic, the insurer, and for running Resolution, the closed life consolidator, said that he expected 10 per cent to 15 per cent of the Rock’s staff to leave voluntarily every year.

“We’ll try to manage it by moving people from sales to the positions left open by natural attrition,” he said, “but it would be wrong to commit to no compulsory redundancies.”

To avoid breaching European state aid rules, the winning bidder must downsize the Rock over three years while it repays £25 billion to £30 billion of government-guaranteed bonds. Mr Thompson said that he would offer uncompetitive rates to customers coming to an end of their mortgage’s fixed term and then direct them back to their broker so that they could remortgage with another provider.

“It’s very sad. You work so hard to build the customer base and yet we’re going to have to actively reduce it,” he said. However, Mr Thompson predicted that the management team could build the Rock’s deposit base to about £20 billion within three years. It had been as high as £26 billion but a run on the bank last September hugely reduced deposits, leaving only £10 billion in the Rock’s coffers.

The management team hopes to sell between £2 billion and £3 billion in mortgages every year, compared with almost £16 billion in the first half of 2007, before the Rock was hit by the collapse of the credit markets.

Mr Thompson said: “I’m a growth-orientated person at heart. I turned Britannic from a £300 million company into a £4 billion company, via the merger with Resolution, in 4½ years. We went from less than one million customers to seven million customers in the same period.”

Olivant, a private equity consortium, dropped out of the takeover battle on Monday, complaining that the three-year deadline to repay the government bonds meant that it could not achieve sufficient returns.

Mr Thompson dismissed criticism of the time limit, which he said had been communicated to bidders by the Treasury early in the auction. He declined to reveal how much the management team would pay the Treasury for its bond guarantee, what coupon it would offer on the bonds or what stake the Government might take in the bank going forward.

The Virgin consortium plans to inject £500 million in equity and raise £500 million in a rights issue at 25p per share, in return for 55 per cent of the Rock — a suggestion that has infuriated shareholders. The management team’s rights issue, on which Mr Thompson said that he had written commitments for at least £500 million, will not dilute existing shareholders’ investments.

Mr Thompson revealed plans to beef up the Rock’s executive line-up with a new finance director and chairman, and committed himself to at least four years at the bank.

He said: “It plays to my strengths. It’s not dissimilar to the turnaround at Britannic. I know banking. I was born and brought up in Yorkshire. And it needs doing, for the good of the City and our position as the financial centre of Europe. We can’t have one of our banks being nationalised.”

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