Northern Rock 'doubles staff in debt management arm' as it braces for rush of mortgage defaulters

The internal memo said the recently nationalised bank had the equivalent of 176 full time workers in the division at the end of April.

But this number is set to increase to 444 by the end of March next year, the memo reportedly said.

Struggling: Staff numbers at the bank are being slashed by 2,000 by 2011

It suggests Northern Rock is expecting to see a big increase in the number of people having trouble paying their mortgage.

In a trading statement issued earlier this month, executive chairman Ron Sandler said the level of mortgages three months and over in arrears was 0.95 per cent at the end of April, up from 0.57 per cent at the end of last year.

The bank is trying to reduce its loan book from £100billion to about £50billion as part of moves to repay about £24billion of Government debt.

As part of the post-nationalisation restructuring, staff numbers are being slashed from about 5,400 people to 3,400 by 2011, with most jobs going this year.

Hard up: Northern Rock is expecting a big rise in the number of people struggling to pay their mortgages according to a company memo

The memo said the number of customer service staff at Northern Rock would be cut from 1,152 to 478 next year, eventually falling to 369 by 2011.

Contact centre staff numbers will also more than halve, from 744 to 350.

But there are no plans to make cuts among staff dealing with savings as bosses try to increase deposits held.

Northern Rock was nationalised in February after the credit crisis forced the bank to seek emergency funding from the Bank of England.

Under the plan to slash its assets and repay the Government loans, the bank is stopping its pro-active mortgage retention programme, with customers instead being offered help to transfer their mortgages to other lenders.

Earlier this year Mr Sandler said Northern Rock had between £25billion and £30billion of mortgages coming up for renewal this year.

Recent figures suggest more and more people have been finding it harder to make ends meet this year as household budgets are squeezed by soaring fuel and food costs.

Government data showed a total of 27,530 mortgage repossession orders were made during the first three months of 2008, up 17 per cent from the same period a year ago.

Earlier this week a study from ratings agency Standard & Poor's also showed a sharp increase in top-rated borrowers struggling with repayments.

The proportion of homeowners in the 'prime' mortgage category more than 30 days in arrears rose to 2.41 per cent during the first quarter of this year, up from 2.11 per cent during the previous three months, S&P said.