THE Alliance and Leicester is cutting 700 jobs in a bid to drive down costs.

The bank, which employs 8,000 staff, said the cuts will be made among workers who do not deal directly with customers. Volunteers will be sought, but the bank said it could not rule out compulsory redundancies.

The Communication Workers Union claimed that up to 1,000 jobs could be cut among "back office" employees.

The union threatened to hold a ballot for industrial action if any of its members were made redundant against their will.

"We believe the bank has come up with a knee jerk reaction to uncertain markets," said CWU official Grace Mitchell. "Given the company profits, there is no need for this sort of measures."

CWU general secretary Billy Hays will seek an assurance of no compulsory redundancies when he meets executives from the bank next week.

Alliance and Leicester said it had previously announced plans to reduce staff by 1,500 by the end of 2003 "to meet revenue generation, investment and cost control targets".

A spokesman said: "The group is in discussions with staff and representatives to launch a voluntary redundancy exercise in non-customer facing areas of our business. This is likely to affect around 700 jobs across all areas of the group and all major sites, to be achieved during 2002."