Note the EU’s role in this:
The bank needs European regulators to approve its rescue plan, and the EU Commission has began examining details of Northern Rock’s proposals.
Under EU rules, public support can be allowed to stop firms from going bankrupt, but long-term government aid that is seen to undermine competition is not allowed.
From The Morning Star:
Staff pay for bank bosses’ blunders
by LOUISE NOUSRATPOUR
FINANCE union leaders and north-east MPs vowed to fight any compulsory redundancies at Northern Rock on Tuesday after the troubled bank announced more than 2,000 job cuts.
The Newcastle-based bank said that “around a third” of its 6,500 jobs will be cut by 2011, with most staff leaving in the first year.
The job losses will affect the north-east region, particularly Newcastle and Sunderland.
The announcement is part of plans to consolidate the business and speed up the re-privatisation process.
As he announced the job cuts to save money, Northern Rock new chairman Ron Sandler promised the remaining staff bonuses linked to how quickly government loans are repaid and the business privatised.
The mortgage lender was forced to turn to the Bank of England for an emergency funding bail-out last September after soaring borrowing costs in the credit crunch.
But it expects to pay back the estimated £24 billion public loan “over the next three to four years.”
The Unite union, which represents Northern Rock workers, vowed to resist any compulsory redundancies.
“We will be working to mitigate the implications of the recent crisis on the employees who have worked tirelessly to ensure there is a sustainable business in the future.” deputy general secretary Graham Goddard said.
Labour MP for Newcastle upon Tyne Central Jim Cousins condemned the job losses as a “very severe blow” to the economy of the region.
“These are what we call anchor jobs and their disappearance will destabilise whole families and have an enormous impact on the community,” he warned.
Mr Cousins called on all north-east MPs to work with Unite to keep the redundancies to an “absolute minimum.”
Northern Rock management insisted that there were plenty of suitable vacancies in the region for those facing the axe.
It pointed to figures from Jobcentre Plus showing that there were 1,100 jobs available in the financial sector in Tyne and Wear and north Durham.
But Mr Cousins rejected the claims as “pretty disrespectful” to the situation actually faced by staff.
“The vacancies are scattered around the region and are mostly in call-centres, which require different skills to what most of the affected workers have,” he argued.
“The majority of Northern Rock staff are women with family commitments,” Mr Cousins pointed out.
“They cannot easily up sticks and go to the other side of the country or have long commuting to work.”
Communist Party of Britain general secretary Rob Griffiths said that staff were being punished for the “disastrous mismanagement” by Northern Rock’s former bosses.
“The former directors should be investigated, possibly fined and forced to repay their previous bonuses and bloated salaries,” he stormed.
Mr Griffiths urged ministers to keep Northern Rock nationalised to “begin to rebuild a public sector in the finance industry based on principles of fair dealing, social justice and accountability rather than greed and deception.”