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Last Updated: Tuesday, 4 December 2007, 16:16 GMT
Rock workers to get pay rewards
Northern Rock branch
Staff have something to celebrate
Northern Rock staff are to receive a pay rise and one-off bonuses as talks on the future of the bank continue.

The majority of the lender's 6,000 staff, excluding management, will get a bonus of 2% of their annual salary plus a one-off 200 Christmas payment.

In addition, staff will get a 4% rise in their annual salary from January.

Northern Rock's advisers were reportedly due to meet the JC Flowers-led consortium on Tuesday to discuss the group's bid proposal.

'Active discussions'

The Flowers-led consortium is seen as the main alternative to a rival group led by Virgin which has been granted preferred bidder status.

There could not be a worse moment to sell Northern Rock and refinance its balance sheet
Robert Peston, BBC Business Editor

But several shareholders are sceptical about the Virgin bid and JC Flowers is reported to be optimistic that it can convince investors of the merits of its proposal.

Should it take control of Northern Rock, the US buyout firm is proposing to immediately repay 15bn of the 25bn so far loaned to the firm by the government.

It plans to repay the remainder over the following three years.

BBC Business Editor Robert Peston said all would-be bidders - including JC Flowers and Virgin - having to raise finance to repay the government loans faced the prospect of doing so at "crippling interest rates" due to the sharp rise in bank lending rates.

Northern Rock would not confirm reports of a meeting with JC Flowers, only saying that discussions over the bank's future remained "active".

The mortgage lender agreed a 4% pay rise for staff - effective from January - after discussions with unions.

It said the one-off Christmas payment and the 2% bonus - which is subject to certain criteria - were in recognition of workers' "great loyalty" at a "difficult" time for the business.



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