In the quarterly Trade Statement released today, the Gosforth based bank revealed that the Bank of England loan facilities are reducing and due to the result of planned mortgage redemptions, the balance sheet is contracting.

Executive Chairman Ron Sandler said: "We remain firmly focused on our business priorities of repaying the government debt, releasing the guarantee arrangements and in due course, returning Northern Rock to private ownership."

The 6,000 staff within the company is expected to be reduced by a third in 2008, and the 90-day consultation period is already under way, leaving staff members just weeks away from finding out if their job is secure.

The bank currently has 700,000 borrowers, but in order to reduce the size of its balance sheet to a sustainable level Northern Rock must achieve a significantly higher level of mortgage redemptions than that has previously been the case.

The company has now established a panel to help maturing borrowers in finding the best mortgage product in the market to meet their needs.

At the end of 2007 the size of the Bank of England loan facilities were £26.9bn, but reduced to £24.1bn at March 31 2008.

Mr Sandler also confirmed that current work on the new building is to be complete, however its future does not necessarily lie with Northern Rock as the company will explore all options, including selling it.

He added: "I am pleased to report that solid progress has been made against our business plan.

"The Bank of England loan facilities are reducing and the balance sheet is contracting as a result of planned mortgage redemptions.

"While arrears have increased, the credit quality of the loan book remains satisfactory and at a level assumed in the plan.

"Clearly the outlook for the UK mortgage market is uncertain but progress against our business plan to date is encouraging."