NORTHERN Rock is undertaking a radical shake-up of its business in a bid to become one of the UK's leading mortgage banks.

While that move will lead to the closure of 20 smaller branches, including eight in the North-East, it will also lead to the creation of about 800 jobs at its Gosforth headquarters and a further 600 at an administration centre in the Solar Building at Doxford Park, in Sunderland.

The 110 people affected by the branch closures, which include sites in County Durham and on both Wearside and Tyneside, will be offered alternative employment at Gosforth or Doxford Park.

The move is part of Northern's ambition to improve its status as a national mortgage bank.

That status will be enhanced by the opening of ten flagship mortgage branches in major UK cities during the next year.

Sites for the branches include Coventry, Derby, Norwich, Oxford, Portsmouth and Wolverhampton.

Adam Applegarth, chief executive of Northern Rock, said: "Northern Rock is a successful, fast growing, North-East-based company.

"The changes to our business we have announced reflect the way in which our business is developing our continuing growth, the demands of our customers and our position as a major UK mortgage bank."

Ron Stout, public relations manager for the bank said: "Internet and telephone banking are proving increasingly popular with our customers and we have to take notice of that.

"However, the jobs we are creating are not just call centre jobs. They are skilled staff who have to have an understanding of banking matters, and who can move between departments."

He said: "All the major towns and cities of the North-East will continue to be covered, with at least 80 per cent of our customers having a branch within five minutes drive of their homes."

The move represents how far the bank has come since it moved away from its roots as a building society in 1997.

Mr Stout said: "Since our conversion, our assets have more than trebled to £48.5bn, with our annual gross lending now five times what it was in 1997.

"Northern Rock was admitted into the FTSE 100 index in September 2001, and is now ranked within the top 70 shares."

According to Mr Stout, a large proportion of the 221,000 members of the society, including 76,000 in the North-East, who received 500 shares when the society floated, still maintain a holding in the company.

Mr Stout said: "Those shares were initially worth £2,260 on flotation, a price of £4.52 per share.

"Now they are worth in excess of £3,650, with the price fluctuating around the £7.30 mark."

Northern's plans for the future include continued investment in its Gosforth headquarters, with a further £30m earmarked, taking the total cost of the project beyond £80m.

The 15 acre-site, into which you could fit eight St James' Parks, is already impressive.

The buildings, all linked by central covered walkways, feature four restaurants and a gymnasium, with all the buildings, except one, named after castles in the region.

The exception is the Christopher Sharp Building, named after the chief executive who instigated Northern's conversion to a plc, but who died suddenly in May, 1997.

Northern Rock can trace its history back to the 1850s and the Northern Counties Building Society and Rock Permanent, which merged in 1965 to form Northern Rock.

Following the merger, Northern Rock had 220 head office staff. Today, that total stands at more than 2,500 and is about to go above the 4,000 mark when the new jobs are in place by the end of 2005.

That expansion is aimed at promoting the bank's brand and helping it to catch-up with some of its bigger rivals.

The Halifax is currently the biggest of those, attracting 24 per cent of all new business, with Abbey following a close second, and Lloyds TSB in third place

Northern is sixth in terms of mortgage lending, but expects to move up the table, as more people become aware of its brand.

Mr Stout said: "People in the North-East are well aware of who we are, but we have to try and gain wider recognition for our brand if we want to be regarded as a national player."

To that end, Northern is continuing to look at sponsorship deals.

While it is continuing to support Newcastle United, the Newcastle Falcons and Durham County Cricket, it is looking further afield, having become a sponsor of Middlessex County Cricket Club, who play at the home of cricket, Lords.

Despite the move away from the traditional branch network, and away from its roots in the North-East, Mr Stout is keen to stress that Northern remains committed to the region.

He said: "We have a long tradition and intense loyalty to the North-East. Our investment in Gosforth and Sunderland shows how committed we are to this region. We have no intention of exporting jobs from Byker to Bangalore."

Mr Applegarth concluded: "We are reaffirming our commitment to the North-East by way of further substantial investment in the region and the creation of a substantial number of new jobs for the future.

"That has to be good news, not only for the company, but for all those associated with it."