Newcastle Building Society has blamed the loss of a key outsourcing contract with failed Icelandic Internet bank Icesave, along with tough economic conditions, for its decision to make 150 staff redundant.
Following a review, the building society says it cannot support the current staff levels at its strategic solutions division, which provides technology, processing and administrative support services to third party clients.
This is largely due to the loss of key business from Icesave, the online bank owned by Landsbanki that collapsed in October. The contract had required 100 dedicated Newcastle Building Society staff.
Although no branches will close, the redundancies will hit most areas of the business but the majority will be in the society's head offices in Newcastle city centre and Cobalt business park, in North Tyneside.
The Cobalt facility was only opened in the last few months and was specifically designed to house the strategic solutions unit and 500 new staff.
"Our Strategic Solutions division has a pipeline of new business at various stages of development, but this is not currently sufficient to replace the loss of Landsbanki's Icesave," says Colin Seccombe, chief executive, Newcastle Building Society.
The society says the decision to "manage" costs was necessary in the face of the expected difficult trading conditions this year, with residential lending predicted to be significantly lower than in previous years and commercial lending activities set to be wound down.
A formal 90-day consultation period has begun and the society says it will be working closely with staff and the union, Unite, throughout the process.
David Isbell, regional officer at Unite says: "Unite has demanded a meeting with the Newcastle Building Society in order to obtain clarification on the implications of this decision.
"The society owes it to their staff and their customers to ensure that they do not make kneejerk decisions at the expense of the experienced and dedicated workforce."