A&L says plans reduce paper-based processing means, the group will seek about 350 voluntary redundancies at its Bootle site on Merseyside, which currently employs around 2000 staff.

The bank reviewed its back office processes under plans to cut the ratio of cost-to-income at its retail bank to under 50% by 2010.

As a result of the planned improvements and automation of processes, call centre staff will now be able to resolve a far higher proportion of retail and commercial customer enquiries more quickly without the need to pass them to back office staff.

Richard Pym, group chief executive, A&L, says: "We are transforming Alliance & Leicester into the UK's leading direct bank. This requires modern, efficient banking processes across the group."

Redundancy costs will be incurred in 2006 and are expected to total between £20m-£25m.