The former building society now plans to expand its internet and telephone banking operations. It says this will create 400 jobs.

A Northern Rock spokesman said that 14 of the 29 branch closures will be in the north-east of England.

Some of the new jobs will be at a call centre in Sunderland, which will handle mortgages.

The bank is also taking on extra staff at its headquarters in Newcastle to handle e-commerce.

The BBC's Simon Gompertz reports: "Northern Rock's closures represent a quarter of its branches"

It plans to launch cash deposit operations in Ireland, based on telephone, post and internet facilities in partnership with Canadian Imperial Bank of Commerce.

Chief executive Leo Finn said that Northern Rock was "renewing itself. Our size and focus allow us to respond early and quickly to changing markets and customer preferences. We are changing shape to meet a demanding future."

He added: "Our performance to date in the second half of this year is very encouraging. For example, in terms of mortgage applications, in the second half of 1999 we are running 85% ahead of the same period last year."

Northern Rock profits

Earlier this year, the company made a profit of £111.5m in the first half of the year, compared to £107.2m last year.

Northern Rock is currently the twelfth largest UK quoted bank (by market capitalisation).

In April 1997, Northern Rock Building Society members voted overwhelmingly to convert to a public limited company. At the time, Northern Rock was the UK's fourth-largest building society.

The news of Northern Rock's decision follows weekend reports that Barclays is to close about 200 of its branches next year in an unexpected escalation of its cost-cutting efforts