Virgin would cut jobs at Northern Rock

Richard Branson's Virgin Group would cut jobs at Northern Rock if it ends up taking over the embattled mortgage lender, abandoning an earlier commitment to not lay off workers, it said on Wednesday.

Any job losses among Northern Rock's approximately 6,000 staff would pile fresh pressure on Prime Minister Gordon Brown, who is struggling to secure a private sector rescuer for Britain's biggest casualty of the global credit crisis.

The BBC said on its website that Virgin would cut around 1,000 jobs and cited Jayne-Anne Gadhia, the head of Virgin Money who would run the bank if Branson's bid is successful, as saying that Britain's finance ministry would accept the cuts.

"We can't continue to make the promise that there will be no redundancies, but we would aim very much to minimise any reductions," Gadhia told BBC Radio 4's Today programme.

A Virgin spokesman declined to say whether the job losses would reach 1,000 and said the group would make as many reductions as possible by not replacing staff that leave.

Virgin and an in-house management team both pitched rescue offers for Northern Rock this week, but a third suitor, investment firm Olivant, quit the race on Monday saying that government demands to be repaid about 25 billion pounds in loans within three years were too onerous.

Brown, who has seen his popularity slump during the five-month crisis at Northern Rock, has said he would temporarily nationalise the bank if a private sector solution could not be reached.

Northern Rock was forced to seek emergency help from the Bank of England in September after the global credit crunch dried up its sources of funding in financial markets. This sparked the first run on the deposits of a major British bank for over 140 years.

Separately, the Financial Times newspaper quoted Brian Pitman, who is leading Virgin's bid, as saying a deal for Northern Rock would not be a route to a quick profit.

"This is a viable proposition but to suggest somehow that we're going to turn round this thing in half a year...and everyone is on to a gravy train is ridiculous," he was quoted as saying.