SOME of the 2,000 looming job losses at Northern Rock will be avoided if a deal can be struck with a rival lender, the state-owned bank told MPs yesterday.

Ron Sandler, the government-appointed executive chairman, revealed he was trying to persuade another High Street bank to make use of the Rock's skilled processing staff in the region.

Such a "through-lending arrangement" would save some of the 2,000 redundancies announced in March, when the plan to rapidly shrink the size of the business was published.

Most of the job losses will be at the Rock's head office in Gosforth, Newcastle, and at Doxford Park, in Sunderland, where it has a call centre and administrative facilities. Talks with trade unions are ongoing.

But, giving evidence to the Treasury committee for the first time, Mr Sandler said: "We have extremely capable staff processing at the bank, but we are now beyond the need for those facilities.

"If we can find an alternative lender with an interest in employing some of our capability, to lend or process mortgages for that bank's books, it will mitigate some of the job losses we are anticipating.

"It will also be a productive use of what is an efficient processing capability."

The chairman, who took charge when the Rock was nationalised in February, also revealed he had an "open mind" about axing the tarnished name of Northern Rock when he arrived.

But he was now convinced that the brand was "damaged, but not damaged irreparably", adding: "I am now giving no consideration to changing the name."

Mr Sandler also pledged to continue Northern Rock's sponsorship of Newcastle United football club and the rugby team Newcastle Falcons, although deals with county cricket clubs Durham and Middlesex have been dropped.

However, the Rock's chief financial officer Ann Godbehere, sitting alongside Mr Sandler, admitted the credit crunch could throw off course the bank's plans to repay its £26.9bn government loan by the end of 2010.

A total of £2.8bn had already been paid, with 25 per cent due to be handed back by the end of the year, but a 1992-style recession - with house prices falling by perhaps ten per cent - would threaten that.

Ms Godbehere said a property crash would prevent Northern Rock increasing its redemption rate - the number of people who move their mortgages elsewhere - to 60 per cent.

But, insisting a "stress test" had pointed to delay of about six months, she added: "Even under that recession scenario, the loan was repaid with only a short delay from the original timetable."

Mr Sandler was asked whether Northern Rock would be satisfied by Newcastle United manager Kevin Keegan's target of "mid-table security", but pledged to aim higher.

He told the MPs: "I don't expect we will ever be top of the premier division, but I hope we will be well-established within the leading pack."