Northern Rock doubles debt management staff
Northern Rock plans to double the number of staff looking after its mortgage book as it gears up to deal with more customers having trouble paying off loans in the worsening economic climate.The new executive team of the nationalised Newcastle-based bank has told staff in a memo that it wants to bolster its debt-management arm from the equivalent of 176 full-time workers this April to 444 by next March.
The mortgage lender explained yesterday that the plans matched a commitment to overhaul checks and balances at Northern Rock after troubles there last summer sparked the first run on a major high-street bank in 141 years. It also pointed to increasing economic turbulence.
"As part of our business plan, we have committed to strengthening our controls and processes. Debt management is one area where this strengthening will occur," a spokesman said.
"As you know, the company has announced its intention to create a smaller, more focused, financially viable mortgage and savings bank.
"It is also important that whilst we reduce the size of our balance sheet we manage the mortgage book more closely, especially in the more difficult economic environment. This would be a prudent step for any bank in a worsening macro-economic environment."
There are already signs that troubles in financial markets, worries about a slowing housing market and rising household bills are taking their toll on borrowers.
Northern Rock recently revealed that the number of customers falling behind with monthly loan repayments almost doubled in the past three months.
Arrears - which Northern Rock had previously boasted were below the industry average - climbed from 0.57% to 0.95%, raising concerns that the quality of the lender's mortgage loan book was deteriorating rapidly.
Although the bank is cutting total employee numbers by some 2,000, it believes the mortgage arm needs more resources to keep arrears under control while it seeks to pay off its own massive debts. It is trying to reduce its loan book from £100bn to about £50bn as part of moves to repay some £24bn it received in loans from the Bank of England.
The bank's memo to staff, which it said was part of regular updates to employees as it consulted unions over job cut targets, also revealed big reductions ahead in its customer services and sales divisions.
Reflecting the bank's push to downsize as it seeks to pay off its debts, it plans to cut the number of customer service staff from 1,152 now to 478 next year, eventually falling to 369 by 2011. The number of contact-centre staff, who market products to potential customers, will also more than halve, to 350 from 744.
The spokesman said that the indicative figures in the memo remained subject to consultations with staff representatives and to the "exploration of any other viable alternatives".
Jobs in the savings departments appear to be safe for now, reflecting the fact that part of the bank's overhaul involves building up the deposits it holds.
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