The growth area at Northern Rock: debt management

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It seems Northern Rock is wrestling with something of a Catch 22. Figures leaked today show just where the bank plans to cut staff. It has already said over 2,000 jobs will go and many of the cuts are unsurprising - departments like sales and lending will be halved as the bank cuts its mortgage business.

But there's one area where the bank will be adding staff in the coming year - it will almost triple the number of people in debt management from 176 to 444. This new army of advisors implies Northern Rock expects a lot of people to start getting into trouble with their repayments. This means they wouldn't be able to pay off their mortgages - the main source of cash for the bank to pay back the taxpayer.

If this is the case then to get the money back any time soon the bank would probably have to start repossessing homes. Surely there's no way the government is going to let that happen with all the attendant publicity? So there's the unenviable choice: don’t pay back taxpayers quickly (and get stick) or do pay them back and start repossessing (and get stick).

There's one more factor that makes this even more challenging. The first mortgages to be redeemed will be by 'prime' borrowers who can get loans elsewhere. So the Rock will be left with just the less-than-prime (dare we say subprime?) borrowers and surely this is exactly not what it wants. Is that a second Catch 22? Is it possible to have a Catch 44?

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