Nearly 1,000 staff at Bradford & Bingley’s Crossflatts office will remain in the Aire Valley once the nationalised mortgage business becomes part of a new operation with part of Northern Rock.

Over the next 18 months B&B bosses will focus on integrating the operation into Northern Rock Asset Management, a new entity being created from the ‘bad bank’ part of Northern Rock and Bradford & Bingley.

Richard Banks, B&B’s managing director, said NRAM would retain B&B’s Crossflatts base along with the Newcastle and Sunderland offices of Northern Rock.

He said: “Bradford & Bingley will remain in the Aire Valley and Northern Rock people working at Gosforth and Sunderland will remain there. Our focus over the next 18 months is to integrate the operations in NRAM while retaining our operating bases.”

Once NRAM is up and running, and subject to economic conditions, it could return to the private sector as a mortgage services business, or even as a lender once again.

Mr Banks also confirmed that the sale of B&B’s former head office building in Main Street, Bingley, to Sainsbury’s has completed last week. The deal would enable B&B to return another £2.8 million to the taxpayer.

Mr Banks said: “This is good news for Bradford & Bingley as we have got rid of an empty building and good for the local economy as Sainsbury’s plans to develop a supermarket which will help make Bingley a destination town.”

Bradford & Bingley revealed it returned to profit in the first half of 2010, but still owes £27 billion to the taxpayer. However, sharply lower bad debts and bottom line profits helped B&B call on less working capital than the £9.5 billion expected.

The company moved out of the red with underlying pre-tax profits of £79.4 million in the six months to June 30.

This compared with half-year losses of £160 million a year earlier.

Bad debt charges reduced to £863.3 million from £884.1 million at the end of 2009 as fewer borrowers fell behind with their repayments.

B&B said arrears levels of cases three months or more in arrears reduced 18 per cent since December to 15,653.

Mr Banks said B&B had also worked hard to keep people with mortgage difficulties in their homes, supporting around 4,000 borrowers in the six month period.

The group also continued to run down its mortgage book as part of its plan to repay State cash, seeing redemptions of £1 billion in the first half.

Operating costs also fell £58.3 million from £65.3 million a year earlier - despite staff numbers increasing to 992 as it took on more employees in its arrears and customer management divisions.

Mr Banks said: “I am pleased to announce that we have returned to profit and made great progress against all our financial targets.”