Northern Rock has said it will cut about 2,000 jobs and slash its home loan book in half.
Northern Rock has said it will cut about 2,000 jobs and reduce its residential mortgage lending by half.
The job cuts, which account for about a third of its staff, will be made by 2011 under plans to turn around the ailing bank's fortunes.
The job cuts, which account for about a third of its staff, will be made by 2011 under plans to turn around the ailing bank's fortunes.
The Newcastle bank was nationalised in February after the credit crisis forced it to seek a Bank of England lifeline, to fund its mortgage loan book.
The Newcastle bank was nationalised in February after the credit crisis forced it to seek a Bank of England lifeline, to fund its mortgage loan book.
Northern Rock must pay back Bank of England loans worth about £25bn.
Northern Rock must pay back the Bank of England loans worth about £25bn.
The bank needs European regulators to approve its rescue plan, and the EU Commission has began examining details of Northern Rock's proposals.
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.
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.
EU spokesman Ton van Lierop said: "To be viable without state guarantees it is clear thatNorthern Rock must shrink... Fair competition mustbe ensured between all banks."
EU spokesman Ton van Lierop said: "To be viable without state guarantees it is clear that Northern Rock must shrink... Fair competition must be ensured between all banks."
The Commission has already had formal complaints from Danish banks alleging unfair competition in the European banking sector following the aid given to Northern Rock.
'Sustainable business'
'Sustainable business'
Northern Rock is one of the biggest employers in the North East, with about 6,500 staff.
Northern Rock is one of the biggest employers in the North East, with about 6,500 staff.
A task force, the Northern Rock Response Group, has been established to help those affected find new employment.
A task force, the Northern Rock Response Group, has been established to help those affected find new employment.
Regional development agency One NorthEast is leading the response group, under the agency's chief executive, Alan Clarke.
Regional development agency One NorthEast is leading the response group, under the agency's chief executive, Alan Clarke.
Unite will now be pressing the company for the detailed plans and will oppose any plans for compulsory redundancies Unite union
Unite will now be pressing the company for the detailed plans and will oppose any plans for compulsory redundancies Unite union
Mr Clarke said the news was a "setback" for the regional economy and, in particular, the loyal and dedicated Northern Rock workforce.
Mr Clarke said the news was a "setback" for the regional economy and, in particular, the loyal and dedicated Northern Rock workforce.
But he added: "All the evidence shows that there is strong demand in the North East for the skills that many of Northern Rock workers possess and the vacancies are there to retain as many of these skilled workers in our region as possible."
But he added: "All the evidence shows that there is strong demand in the North East for the skills that many of Northern Rock workers possess and the vacancies are there to retain as many of these skilled workers in our region as possible."
The Unite union said it would oppose any plans for compulsory redundancies at Northern Rock. It is seeking assurances that the workforce will be reduced through purely voluntary means.
The Unite union said it would oppose any plans for compulsory redundancies at Northern Rock. It is seeking assurances that the workforce will be reduced through purely voluntary means.
"The union will be working to mitigate the implications of the recent crisis on the employees, who have been working tirelessly to ensure there is a sustainable business in the future," said Graham Goddard, Unite deputy general secretary.
"The union will be working to mitigate the implications of the recent crisis on the employees, who have been working tirelessly to ensure there is a sustainable business in the future," said Graham Goddard, Unite deputy general secretary.
"Unite will now be pressing the company for the detailed plans and will oppose any plans for compulsory redundancies."
"Unite will now be pressing the company for the detailed plans and will oppose any plans for compulsory redundancies."
The UK Shareholders Association (UKSA) is to announce legal action by Northern Rock shareholders on Wednesday who want "fair recompense" for the compulsory purchase of their shares by the government.
Are you a Northern Rock employee? What's your reaction to the news? Send us your comments by filling out the form below.
Are you a Northern Rock employee? What's your reaction to the news? Send us your comments by filling out the form below.
