Nationalised lender Northern Rock said today that it was planning to cut up to 650 jobs by the end of the year.
The firm has launched a consultation with trade union Unite over the latest cuts, which are aimed at reducing costs ahead of an eventual return to the private sector.
The lender would look to avoid compulsory job losses where possible but chief executive Gary Hoffman said it was "important that we continue to deliver value for taxpayers".
He added: "There is still a challenging economic environment and, in order to meet our objectives, we must align our staffing level to match the smaller size of the business, increase efficiency and reduce our cost base."
Northern Rock currently has 4,500 staff. Unite called the cuts "devastating".
The union's national officer, Rob MacGregor, said: "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 group's final salary pension scheme - which closed to new entrants in 1999 - will now also be closed to existing members, Northern Rock added, although it will improve the terms of its cheaper money purchase scheme.
Mr Hoffman acknowledged that the job losses meant "an unsettling time" for the group's employees, but said the group would work with local agencies such as One North East to support those affected.
Northern Rock has been in public ownership since February 2008 after becoming an early casualty of the credit crunch and being propped up by the Bank of England.
Thousands of staff have already lost their jobs since the turmoil at the group, which completed its restructure into "good" and "bad" banks at the turn of the year.
The firm - which is lending around a fifth of the mortgage loans it made before the credit crunch - made pre-tax losses of £257.5 million in 2009.Reuse content