Northern Rock, the recently nationalised mortgage lender, today confirmed plans to lay-off nearly a third of its staff, with the majority of job cuts expected this year.

The bank said today that it will cut 2,000 of its 6,500 employees, as it attempts to reduce costs and return the company to private ownership.

Northern Rock will open discussions with unions about the proposed cuts, which will be completed by 2011, although the company said that most jobs will go in 2008 "across all levels of staff". The bank is intending to pay back a £25 billion emergency loan that the Bank of England supplied in September last year when Northern Rock made a catastrophic profit warning that led to a run on the lender. The new management of the bank is hoping to repay the loan over the next three to four years.

Graham Goddard, deputy general secretary at Unite said: “If downsizing goes ahead, Unite will be demanding that Northern Rock gives a commitment to no compulsory redundancies.

“The workforce did not contribute to the situation which the bank now finds itself in and should not be expected to pay the ultimate price by being forced out of their jobs.”

Ron Sandler, executive chairman at Northern Rock, said: “In order to meet our previously-stated corporate objectives, it is necessary for us to contract to a smaller and more sustainable business. Regrettably, this is likely to involve a reduction in current staffing levels of around 2,000 and a restructuring of the company.

“This is a very difficult time for our people and we will continue to work closely with them and Unite, to minimise the extent and impact of potential job losses. We remain closely engaged with local agencies, including One NorthEast, to ensure that those who may be affected are offered as much support as possible.”

Northern Rock said today: "The company will now commence the formal 90-day consultation period with Unite and other employee representatives, with the inaugural meetings planned for May 1, 2008. The likely start date for any potential job losses has not been set but will be agreed, with Unite and other employee representatives, during the course of the consultation period."

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