As Lloyds Banking Group races to cut costs in anticipation of a cut in interest rates, it is set to axe 3,000 jobs and close 200 branches.
Anticipated cuts to interest rates following the vote for Brexit last month and a fall in the use of branches by customers were the reasons behind the bank’s decision to cut jobs. The City now expects rates will be cut from their 0.5% historic low on 4 August and Mark Carney, the Bank of England governor, signaled a rate cut would take place during the summer.
9,000 jobs were cut in the bank in a three-year cost-cutting programe in October 2014 and before that 45,000 jobs were cut by the 9%-taxpayer-owned bank after the rescue of HBOS during the 2008 crisis. Down some 54,000 following the HBOS takeover, Lloyds, which also owns Halifax, employs around 75,000.
There was furious reaction to the cuts announcement by the unions. He was seeking urgent talks with the bank, said Ged Nichols, general secretary of the Accord union, which represents 22,000 staff who joined Lloyds from Halifax.
“The loyal, dedicated and customer-focused employees in the Lloyds Banking Group are still reeling from recent job losses. They will be bewildered by today’s news and wonder what has happened that is so catastrophic that these further job cuts and branch closures are necessary. Interest rates might be lower for longer but why are job losses higher and faster? Where will the axe fall next?” said Nichols.
Customer service could be damaged, the Unite union said.
“This grim news of yet more job losses and branch closures will send a shiver down the spine of Lloyds employees, who have worked hard to make the bank a success and deliver excellent customer service against a backdrop of continual uncertainty,” the Unite national officer Rob MacGregor said.
The latest announcement means that 400 will be shut by the end of next year as the bank had already earmarked 200 branches for closure by 2017.
The decision to cut jobs – which will save £400m – had been tough, said António Horta-Osório, Lloyds’ chief executive. But faster than had been the case at the time of the previous announcement to cut jobs, use of branches had fallen by 15% year on year, he said.
He was speaking as the bank reported a doubling of first half pre-tax profits to £2.5bn and said that he expected the Bank of England to cut rates to 0.25%. The underlying profits – which exclude restructuring costs and other items were down 5% at £4.1bn, was the focus of the bank.
Well below the 73.6p average price at which taxpayers bought their stake in the bank, the Lloyds share price dived below 50p in the immediate aftermath of the vote for Brexit.
“Following the EU referendum the outlook for the UK economy is uncertain and, while the precise impact is dependent upon a number of factors, including EU negotiations and political and economic events, a deceleration of growth seems likely. Given the sustainable recovery in recent years, the UK economy enters this period of uncertainty from a position of strength and is well positioned to face any economic headwinds,” Horta-Osório said.
(Adapted from The Guardian)