Northern Rock to boost debt
LONDON, May 30 (Reuters) – British lender Northern Rock plans to more than double its debt management staff in the coming year in the face of rising arrears and a deteriorating macroeconomic environment, a source close to the situation said.
Northern Rock, Britain’s fifth-largest mortgage lender, was forced to seek emergency loans from the Bank of England in September after a funding crisis, prompting the first run on the deposits of a major UK bank for 140 years.
The mortgage bank, nationalised in February five months after its near-collapse, plans to halve its mortgage book by 2011 as part of a comprehensive overhaul of its strategy. It warned earlier this month that arrears had more than doubled from the end of last year, as it encouraged customers to remortgage elsewhere but was left with riskier clients. The source, confirming details of an internal memo to Northern Rock staff, said on Friday that the bank’s debt management team would swell from 176 at the end of last month to 444 by the end of March next year, before coming down to 282 by December 2011.
“Arrears are rising and as the size of the (mortgage) book is reduced, management of the book is going to be very important,” the source said. “There is also a more difficult macroeconomic environment, so this is a prudent step”.
The numbers released on Friday were part of a broader document on Northern Rock’s plans to cut 2,000 jobs, out of a workforce of almost 5,500, over the next three years. Northern Rock said the memo was part of its efforts to update staff as part of its consultation process with unions.
“The indicative figures noted in this staff communication are subject to the consultation process, and exploration of any other viable alternatives,” the bank said in a statement.