STAFF at Northern Rock's so called "bad bank" are facing an uncertain future after being told its Newcastle site is set to close within 18 months.
Although the majority of Northern Rock Asset Management (Nram) employees will be offered alternative roles by UK Asset Resolution (Ukar), which oversees Government controlled banking assets, the state-owned organisation admitted there were likely to be job losses among the 724 staff.
Ukar, which, as well as Nram, is responsible for the nationalised arm of Bradford and Bingley, said it was to focus its work from offices at Doxford in Sunderland and Crossflatts in Bingley, West Yorkshire.
The majority of alternative roles offered to Newcastle based staff are expected to be at Doxford, 18 miles away.
Richard Banks, chief executive of Ukar, was at the Gosforth site yesterday to break the news to workers.
He said: "Our job is to manage the wind down of the mortgage books. By the end of 2013 we expect the number of mortgages to have reduced by 25 per cent since Ukar was established.
"As a consequence, we will need fewer people and it will no longer be cost-effective to run the business from three sites.
"Our duty is to deliver value for money for our owner, the UK taxpayer.
"The loss of some jobs is regrettable but we will work hard with colleagues and the union to relocate people where possible and offer support to those colleagues affected."
Last month, Sir Richard Branson's Virgin Money had an offer, potentially worth more than £1bn, for "good bank" Northern Rock plc accepted by the Government.
Northern Rock plc's 2,100 staff were guaranteed there would be no job cuts for at least three years, other than the 680 already announced earlier this year.
David Fleming, national officer of union Unite, said: "It is devastating news for the 700 staff based there. Just last month the region had the great news that VirginMoney would commit to the Northern Rock site in the NorthEast. This much-needed boost has been short-lived."
There is expected to be a phased transfer of staff from Gosforth, which should be completed by the summer of 2013.
Ukar employs 2,400 staff, with 526 at Doxford, where earlier this year it announced it was creating 50 jobs in debt collector roles.
Northern Rock was nationalised and taken into Government ownership in February 2008 and split in two on January 1 last year, forming a mortgage and savings bank called Northern Rock plc and Nram, which holds the rescued bank's old mortgages and unsecured loans.
The management and control of Nram was then integrated with Bradford and Bingley, which was nationalised in 2008, in October last year.
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