A BANK that axed almost 1,000 jobs in Newcastle when it out-sourced work to India denied claims yesterday that it was reversing its decision.

Lloyds TSB closed its Newcastle call centre in 2004, with the loss of 968 jobs, and transferred work to a contact centre in Mumbai.

Yesterday, the Lloyds TSB Group Union claimed the bank, which employs more than 350 people in Sunderland, was closing its Mumbai call centre and bringing work back to the UK.

However, a spokeswoman for Lloyds TSB yesterday dismissed the reports, but admitted work levels at the Mumbai centre had dropped due to the introduction of new technology.

She said its new Interactive Voice Recognition (IVR) technology, which allows customers to resolve some problems through an automated service, has resulted in a fall in the number of inquiries.

"It has reduced the number of calls being handled by the call centre by 25 per cent, which is more than what we predicted. We had anticipated an eight per cent drop in calls," she said.

She said the effects have been felt in Mumbai, which handles overflow calls from the UK, and staff levels have fallen due to a non-replacement policy.

Lloyds TSB employs about 2,800 people in Mumbai, many of whom are involved in back office work and data processing. About 600 are thought to work in the call centre.

The Group Union, which represents more than 40,000 of the bank's staff, yesterday stuck by its claims that the Indian call centre was expected to close altogether by the end of the month.

It said that Lloyds TSB will have to recruit hundreds more staff in the UK to replace those in Mumbai as it battled against growing customer dissatisfaction.

"More than 400,000 Lloyds TSB customers have signed a petition saying they are opposed to having their financial arrangements handled abroad," said the union.

Last month, the bank announced it was closing a service centre in Peterborough with the loss of 243 jobs. At the same time, it announced the creation of 400 back office jobs in India.