FEARS were last night growing for 700 call centre jobs in the region as bank group Abbey warned up to 2,000 jobs will be axed this year as it continues its turnaround under Spanish ownership.

Abbey chief executive Francisco Gomez-Roldan said between 1,000 and 2,000 jobs will go, following the 4,000 cut last year.

It came as the bank said its recovery was on track after it returned pre-tax losses of £21m in 2004 to profits of £596m last year.

Abbey - bought by Banco Santander Central Hispano in November 2004 for £9.5bn - said the further job cuts would help deliver a more efficient business.

A spokeswoman said: "The majority will be from the back office as we focus on the front end of the business.

"The majority last year were from the back office and that will be repeated this year.

"It is too early to identify exactly where the cuts will be."

Last year, Abbey closed its Gateshead contact centre with the loss of 235 jobs.

Now question marks hang over the fate of its mortgage processing and call centre in Thornaby, near Stockton.

The spokeswoman said she could not confirm exactly how many staff were employed by Abbey in Thornaby, but the figure is believed to be about 700.

Last year's cuts helped deliver cost savings of £224m compared with initial expectations of about £100m.

When Santander took over Abbey, the British bank employed 24,500 staff. That was cut to 20,400 by the end of last year, with further reductions announced today.

The lower costs through staff cuts last year combined with better-than-expected revenues - slightly up from £2.5bn in 2004 to £2.52bn last year.

Trading profits before tax, which strip out the costs of restructuring the business under Santander, were up about 34 per cent to £775m.

Mr Gomez-Roldan said: "The results clearly show that we are on track in our efforts to turn Abbey around.

"We have exceeded our targets we set for 2005. We've made excellent progress in reducing costs across the business, and there are early but clear signs of sustainable revenue growth."

Customer loans and retail deposits both rose four per cent in 2005, while mortgage lending lifted ten per cent to £27.6bn.

But Abbey said it increased the amount of money it set aside to cover bad debts by £54m last year, following "some modest credit quality deterioration" experienced across the industry.

Abbey said £12m related to mortgages, while most of the rest related to unsecured loans.

Santander recently unveiled plans to bring Abbey's credit card operation back in-house - four years after it was outsourced in a £289m deal.