As many as 600 jobs could be at risk in Edinburgh after Dutch insurance firm Aegon announced plans to cut a quarter of its UK costs.

The firm admitted the scale of the "inevitable" job cuts will become clear only after a full review, expected to conclude in September. However, the business currently employs 2400 pensions professionals in Edinburgh, prompting the suggestion around 600 posts could be axed.

Tuesday's announcement ended months of speculation over whether the firm, which employs a total of 3700 people in Britain, planned to sell its UK business outright.

The firm has now expressed a commitment to continue trading in the UK, but said it had to review the way it worked, focussing on two main streams of work in the UK - corporate pensions and investments for those approaching retirement.

A spokeswoman for the firm told STV News that managers would be examining various efficiency and payroll saving options over the coming months. They then plan to publish a full cost-cutting strategy in late September, with the process due to conclude by the end of 2011.

She admitted job losses were inevitable, but stressed the company was working closely with staff and union representatives and aimed to avoid compulsory redundancies wherever possible.

Most of the firm's employees in Edinburgh are represented by trade union Aegis. The union's general secretary, Brian Linn said: "Whilst it’s reassuring that AEGON remains committed to the UK, the scale of change announced today has come as a blow to our members.

"At this point, we don’t have any details how these changes and cost savings can be achieved. We need to see a breakdown of the company’s proposals before we can assess the likely impact on our members.

"The company has committed to sharing their plans with Aegis as they develop and we expect to work through these over the next few months. We’ll be in a position to comment further then."

The company said it had suffered a drop in business as a result of the recession and insisted the planned cost-cutting measures would allow it to continue to grow business in the UK and protect jobs in the future.

However, the potential job losses have been described as devastating by Labour's Edinburgh Central MSP, Sarah Boyack.

She has urged SNP Ministers to intervene to prevent the latest cuts to the city's financial sector, saying: "Immediate steps must be taken to protect as many of these jobs as possible.

"600 job cuts would be a devastating blow to the sector and this will be an extremely anxious time for Aegon's staff in Edinburgh as they wait to find out where the axe will fall.

"I urge SNP Ministers to enter talks with the company as soon as possible to avoid job losses."

A Scottish Government spokesman said: "It is too early to come to any conclusions on what the impact will be on Scotland.

"The Finance Secretary has already spoken to Otto Thoresen of Aegon and agreed the Scottish Government will keep in close contact with the company in the coming weeks to ensure the interests of staff and Scotland's financial services industry are met.

"This industry makes a major contribution to Scotland's economy, and we will help it maintain its real strengths and adapting to change through our collaboration with the industry and wider public sector partners."

Aegon's UK business was founded in 1994 when the Dutch group bought Scottish Equitable.

Its UK cuts are part of wider changes announced today by the firm, which has struggled since the economic crisis struck. It took state aid from the Dutch government and still owes it 2 billion euros.