Northern Rock will reach its job cut target of about 2,000 employees by the end of the year, and those affected are struggling to remortgage their homes as a result.
As part of its new business plan to eventually bring an end to its public ownership by considerably reducing its business size, the nationalised bank aims to cut operating costs by about 20 per cent. This includes cutting a third of its workforce during the next three years, with the majority of losses occurring in 2008.
Not only will these 2,000 people find themselves facing redundancy, but it has also been revealed that some are finding it impossible to remortgage
their homes as their fixed rate deals come to an end.
Seen as a long-term employer, many of Northern Rock's staff opted for special employee rates on their mortgages, but, like the bank's customers, they are being pushed onto other lenders as it works on cutting down on its mortgage
However, with their employment status for the near future uncertain, employees are finding that they are being refused remortgaging deals by other lenders as they too feel the effects of the credit crunch and steer clear of seemingly risky borrowers.
Meanwhile, the union Unite is demanding that Northern Rock acknowledge its responsibility to its staff and ensure that redundancies are made on a voluntary basis only.
"If downsizing goes ahead, Unite will be demanding that Northern Rock give a commitment to no compulsory redundancies," said Graham Goddard, Unite deputy general secretary. "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."
He added: "Throughout the last seven months of uncertainty the employees of Northern Rock have remained committed to the long-term success of the company. Decisions must not be made merely in the pursuit of short-term cost savings."
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