Northern Rock has said it is planning to cut 650 jobs by the end of the year as it continues with its restructuring programme.
The bank, which was nationalised in 2008, said that while it wanted to avoid compulsory redundancies "wherever possible" it needed to "continue to deliver value for taxpayers". Northern Rock said it would be working with local agencies to help those affected by the decision.
Northern Rock also said that it would be blocking its final salary pension scheme to new contributions. The scheme currently has 850 members and was closed to new entrants in 1999. Instead members will be allowed the chance to gain access to Northern Rock's money purchase scheme, which will see its terms improved.
Rob MacGregor, National Officer at trade union Unite, said, "The decision by Northern Rock management to cut over 20% of its workforce and alter the pensions of the remaining staff is devastating. Such massive changes represent a total reappraisal of the service the bank provides to it's customers.
"Since 2008 Northern Rock has reduced its employees by over 2,000, yet staff are being told today that the business has not restructured sufficiently to be cost effective. There are now serious questions about how change, in this important North East based financial institution, is being managed.
"It is unacceptable that we are now seeing rash decisions based on a short-term management strategy in order to make Northern Rock appear more attractive to a private seller. It is now essential that there is political intervention to prevent this business being dramatically scaled back and prepared for sale.
"The scale of these job losses and pensions changes will be painful process for every one of the 4,500 staff at the bank. Unite will be doing everything we can to save the jobs and future of Northern Rock."
Unite claimed that the real job losses this year would be closer 1,000.