Rock takes on new staff to deal with customers' loan troubles

Northern Rock is hiring hundreds of new staff to cope with an expected flood of customers getting into difficulty making their mortgage repayments, it emerged today.

An internal memo says that, while it is planning to axe more than 2000 jobs, the nationalised lender also aims to increase the number of people in the debt management department from 176 to 444.

Chairman Ron Sandler has always planned to decrease the number of Rock customers to get it back on a more sound financial footing. That involves advising thousands of people on getting new mortgages elsewhere.

However, Michael Taylor at economic forecasters Lombard Street Research pointed out that if the housing market goes into a severe slowdown, Northern Rock will find itself with an even greater number of borrowers struggling to meet their mortgage repayments.

"Their strategy was to persuade people to remortgage elsewhere but if the borrowers are in trouble, they won't be able to, and that's why they're gearing up with lots of debt advisers," he told BBC Radio 5 Live.

As Rock is now essentially owned by the taxpayer, the problems of customers falling badly into arrears could quickly become a major political crisis, he added.

"They don't want to be seen to be taking lots of borrowers to repossession courts. As soon as they repossess a home, it'll end up in the papers and look very bad indeed."