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Tesco Bank creates 1,000 jobs on Northern Rock's home turf 28 October 2009
Steven Jackson (about the author)

Tesco, one of the frontrunners to buy Northern Rock, is creating 1,000 new jobs in the bank's heartland of Newcastle.

It announced this morning that it is setting up a new customer service office in the city to handle customer service and sales calls for Tesco Bank, which the supermarket giant is keen to expand.

"Newcastle is the ideal home for our new insurance customer service centre. The north-east of England has strong experience in customer services and the financial sector, with a well-qualified and enthusiastic workforce," said Benny Higgins, chief executive of Tesco Bank. "The city is a great fit for our business and as it develops we will be investing even more in the region over the coming years."

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Recruitment will start next year, although Tesco does not expect to have hired all 1,000 new staff until 2014. It has taken a 15-year lease on a business park site, and is receiving a grant of almost £2m from the local development agencies.

Lord Mandelson, the business secretary, said the jobs being created by Tesco would be "invaluable to the north-east, and to the wider UK economy".

Northern Rock cut hundreds of jobs, many in the north-east, following its collapse into nationalisation last year. Today's announcement comes just hours before the European Union rules on Northern Rock's break-up into a good bank and a bad bank.

The EU is expected to approve a Treasury proposal to split Northern Rock into two: a new savings and mortgage bank with a mandate to lend £14bn by the end of next year, and an asset management arm that would hold its existing debts.

However, there is also a battle at the top of the government over Northern Rock's future, with some ministers pushing to turn it back into a mutualised society. Some analysts believe that Northern Rock would be more secure and would play a more valuable long-term role in the financial sector if it were owned by its account holders.

Source: The Guardian