British bank Northern Rock plans to cut about a third of its workforce and shrink its mortgage lending by half as it aims to repay billions of pounds to the Bank of England within four years.
But its Irish savings business will continue, under a plan outlined today.
Ron Sandler, the troubleshooter running Northern Rock after it was taken under state control last month, said it would maintain a 'modest level' of new loans as he delivered his business plan to European regulators for approval.
The bank, which has borrowed an estimated £25 billion from the BoE, said it expected a 'progressive repayment' of that loan and the release of government guarantees over the next three to four years, while increasing its level of retail deposits.
Its asset base should shrink by about a half by 2011. It expects to cut about one-third of its 6,000 jobs by the same date, and expects most redundancies in the first year.
Northern Rock said it would close its Danish savings operation and repay deposits to customers this year. Sandler needed to reassure EU regulators that Northern Rock will not gain a competitive advantage from being under state control and banks in Denmark had said they were concerned it would benefit.
UK banks have also said they will monitor the savings and mortgage rates the bank offers. Northern Rock said it will ensure it will not use its government support to compete unfairly.