Nationalised lender Northern Rock said today that it expects a further 680 job losses by the end of the year as it moves to drive down its costs.
The taxpayer-owned bank, which recently posted an annual loss in 2010, said the cuts are necessary as it tries to return to profit and prepares for a return to private ownership.
Northern Rock was nationalised in February 2008 after it collapsed amid the credit crisis, sparking the first run on a UK bank for 150 years.
It employed a workforce of around 6,500 in 2007; this latest announcement reduces the workforce to fewer than 2,000.
The Government split Northern Rock in two at the start of last year, forming a mortgage and savings bank called Northern Rock plc and Northern Rock Asset Management (NRAM) to house the more toxic loans.
Earlier this year, the Government launched a tender for advisers to look at options for Northern Rock plc, including a possible sale.
UK Financial Investments, which owns and manages the Government's bank stakes, recently announced the appointment of Deutsche Bank to advise it on options including a sale or flotation.
Northern Rock said its costs were currently too big relative to the size of the company and it had to reduce the number of employees to match its medium term growth expectations.
Ron Sandler, executive chairman, said: "Economic and trading conditions remain very challenging 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.
"In order to meet our agreed objectives, we must continue to manage our cost base, which is too big relative to the size of the company - regrettably, this will involve job losses."
The company said it would minimise compulsory redundancies where possible and would offer voluntary redundancy.
Mr Sandler said: "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 throughout the process and provide support to those who are affected."
Northern Rock said it entered formal consultation with Unite, the union, and other employee representatives on further restructuring of the business.
But Unite was angered by today's announcement.
David Fleming, Unite national officer, said: "This appalling news of 680 job cuts is scandalous.
"Another round of brutal job cuts is simply a step too far for this workforce that has already lost a third of colleagues.
"We are witnessing another move to scale back this already lean organisation in a desperate bid to find a private buyer.
"The staff at this North East-based company have, since near collapse, faced constant change and turmoil with no clarity about their future."
Northern Rock reported a £232.4 million pre-tax loss for 2010 but said progress was being made as the shortfall narrowed in the latter half of the year.
The bank recently announced it was to bundle up its mortgages for sale in money markets for the first time since its collapse into public hands.
It said it would package together some of its "high quality" home loans to offload as part of a so-called mortgage securitisation as it seeks to boost funds for lending.
The move was seen as a further sign the bank is getting back to business as usual ahead of a potential sale back into the private sector.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies