Northern Rock cuts 2,500 jobs to reduce balance sheet

Up to 2,500 face the axe at Northern Rock as the bank is set to half its balance sheet from it current £113bn, curtailing its mortgage-lending business.

The moves come as the bank makes efforts to repay government's £24bn support from the taxpayer which saved the complete collapse of the bank last September.

At the same time, Brussels is to probe the aid package presented by Darling, which is likely to last several months.

The EU Competition Commissioner, Neelie Kroes, is expected to approve the package on condition that the bank weans itself off the government's subsidy and downsizes so as to avoid distortion of competition in the banking sector.

Further reading:

Northern Rock will not affect fiscal policy

PwC's Rock work questioned in the Commons

Northern Rock investors set to sue government