NORTHERN Rock plans to cut more than half of its customer service staff by next year, while boosting the number of people working for its debt management arm.

According to a leaked internal memo, the number of customer service staff will be reduced from 1,152 to 478 next year, eventually falling to 369 by 2011.

Call centre staff numbers will also more than halve, from 744 to 350.

Meanwhile, the recently nationalised bank plans to increase the number of staff working in debt management from about 176 to 444 by the end of March, suggesting it expects to see a large increase in the number of people having trouble with mortgage repayments.

Workers are expected to be moved from other departments within the bank.

A spokesman for Northern Rock said that the figures in the memo, which was circulated to staff earlier this week and subsequently handed to the BBC, were only an "illustration".

The lender, based in Gosforth, Newcastle, started a 90- day consultation process with staff and union representatives on May 1 over plans to shed more than a third of its 6,500 workforce.

The spokesman said: "They are just an indication subject to the consultation process and the exploration of any other viable alternatives.

"We regularly write to all our staff telling them what the latest stage in the process is."

He added: "As part of our business plan we are committed to strengthening our controls and process, and as a responsible lender we want to treat our customers fairly.

"We are having to put a focus on debt management because we are trying to halve our mortgage book."

Executive chairman Ron Sandler, a former city troubleshooter, hopes to reduce Northern Rock's loan book from £100bn to about £50bn as part of moves to repay about £24bn of Government debt.

In a trading update earlier this month, he said the level of mortgages held with the bank that are three months or more in arrears rose by 0.57 per cent between the end of last year and April.

Northern Rock was nationalised in February after the credit crisis forced the bank to seek emergency funding from the Bank of England.