Northern Rock is to shed 680 jobs by the end of the year as part of a restructuring programme.
It says the proposed restructure is intended to improve operational efficiency and align the number of employees with its medium-term growth expectations.
The bank says it aims to mini-mise compulsory redundancies and will offer voluntary redundancy where possible.
Ron Sandler, executive chairman of Northern Rock, says: “Economic and trading conditions remain chal-lenging for a bank like Northern Rock.
“The mortgage market remains subdued and the low interest rate environment continues to act as a headwind for banks and building societies primarily funded from retail savings.”
He adds that for it to meet its agreed objectives, it must continue to manage its cost base which is too big relative to the size of the bank.
The state-owned lender reported a £232.4m loss for 2010 and says cost management will be a focus in 2011 as it moves towards profita-bility and a return to the private sector.
Sandler adds: “This is an unsettling time for our employees who have been through a lot in the last few years. We will keep them well informed through the process and provide support to those affected.”