BUILDING society turned bank Alliance & Leicester is cutting 500 staff.

But the North-East is likely to avoid the worst of the cuts, with just a handful of backroom staff losing their jobs.

The group, which employs 9,000 staff in total, said it would reduce numbers at its Leicester head office by about 130, while about the same number would go at a site in Bootle, Merseyside. Another 60 will go from other locations.

These staff will leave through voluntary redundancy this year or early next year, A&L said.

The remaining 180 reductions will be made by "natural wastage", or by not filling vacancies when they arise.

A spokesman for the group said: "We anticipate that the majority of jobs will go at our head office and on Merseyside. We have completed a voluntary redundancies scheme and do not see any need for compulsory job losses.

"The posts are being lost in our administrative staff, and not from customer facing areas of the business. If there are any job losses in the North-East, we expect they will be kept to a handful."

The reductions follow plans announced by the group last October, when it said that if business volumes stayed the same, it would look for cost savings which would equate to up to 1,500 jobs by the end of 2003.

However, the spokesman added that the business was starting to turn the corner and that it expected the 500 job losses would be the only reductions needed.

The redundancies will add £15m to Alliance's strategy investment costs this year, bringing them up to £85m, although this will lead to lower costs in 2002 and 2003.

A&L said that with the exception of the additional redundancy costs, it was "comfortable" with analysts' forecasts for its profits this year.

Consensus forecasts are for pre-tax profits of £409m this year.

The bank said it would revise its strategic priorities given the uncertain economic outlook, to four per cent growth next year and target "accelerated growth" in 2003.

It was previously targeting an average compound growth of six per cent for the three years to 2003.

A&L added: "We remain cautious regarding the economic outlook for the UK, which continues to be uncertain.

"Nonetheless, we are confident that our strong balance sheet, high quality personal lending, limited exposure to commercial lending and straightforward treasury assets will allow us to come through the period of economic uncertainty relatively well compared with other banks."