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Newcastle Building Society is cutting up to 150 jobs in the wake of the housing slowdown and the failure of Icelandic bank Icesave.

The news will come as a blow to the north-east economy, after carmaker Nissan announced 1,200 staff cuts at its Sunderland plant earlier this week.

The lender expanded rapidly in 2008 as it took advantage of the vacuum left by the collapse of Northern Rock, taking on an extra 200 staff – 60 of them ex-employees of the failed bank – taking total employee levels to 1,300.

But the building society said in light of the housing market slowdown, a slump in commercial lending and the demise of Icesave, which outsourced its back office operations to the society, costs would have to be cut.

The business generated from Icesave alone took 100 dedicated staff, the firm said.

Redundancies will be made in most areas of the business but the majority will be in the society's head offices in Newcastle City Centre and Cobalt Business Park.

No branch closures will occur as a result of this announcement, Newcastle Building Society added.

Chief executive, Colin Seccombe, said: "After creating some 200 new jobs through 2008, we are extremely disappointed to have to make these redundancies, which are a direct result of the unprecedented downturn in the financial markets that we, and most other financial institutions, are experiencing.

"Wherever possible, volunteers will be sought but it is probable that the majority of redundancies will be compulsory," Mr Seccombe added.

Newcastle Building Society is consulting with trade union Unite over the redundancies.

David Isbell, Unite regional officer, said: "Following the announcement by Nissan this ends a dark week for workers across the north-east."

The firm said it is committed to remaining independent and has no plans to merge with another building society.