Nationwide job cuts rise to 900 on merger

BRITAIN'S biggest building society, the Nationwide, has announced 900 jobs are being cut this summer as a result of its merger with Portman, almost double the number expected.

The losses were revealed as the society announced net lending to residential customers was up by 77 per cent, and that it predicted house prices will experience a sharp slowdown during the second half of the year, with rises for 2007 expected to be just 8 per cent.

The chief executive, Graham Beale, said the cuts will happen within two years as the group looks to trim jobs in the combined business. About 250 jobs are set to go in Portman's Bournemouth head office, which will instead become an administration centre, with another 250 due to be axed when Portman's Wolverhampton base is closed at the end of the year. Nationwide expects a further 100 jobs to be shed within the combined retail network, "at a management level", with another 200 to 300 cuts.

Nationwide pledged in March that there would be no compulsory redundancies among Portman's branch counter and sales consultants teams within three years of the merger. However, about 88 Portman branches are to be closed or merged with Nationwide branches in areas where both societies have a presence. The combined group will have a network of 894 branches. Assuming 900 jobs, the enlarged Nationwide group will be left with about 17,600 positions. There was better news from the business itself, as it delivered its forecast 16.6 per cent increase in pre-tax profits to 652 million, in part thanks to surging house prices. Net lending to residential customers was up by 77 per cent at 11.2 billion, giving it a 10.2 per cent share of the mortgage market.

The society's assets, which also include savings, loans and insurance policies, rose by 13.9 per cent over the year to 137.4bn.

Beale suggested the housing market will suffer a sharp slowdown during the second half of the year, leading to average annual property price rises this year of as little as 5 per cent.

"Our forecast for house price growth is 5 per cent to 8 per cent in 2007, reflecting a cooling in the second half of the year as increased interest rates filter through," he said.

Nationwide's most recent survey, published at the end of April, showed annual price inflation at more than 10 per cent, with London and the south-east leading the way.

Other surveys have shown an annual growth pace up to 10.9 per cent for the whole country and 14 per cent for London. But despite this, Beale stuck to his forecast for property prices, a prediction he made almost six months ago.