UK: Lloyds Banking Group axes another 9,000 jobs
- Credit: PA
State-backed Lloyds Banking Group is to slash 9,000 jobs and shut 200 branches under a new strategy it claims will improve efficiency and customer service.
The closures spell an end to its commitment to be the “last bank in town” and represent around a tenth of its network of 2,000 sites.
Lloyds will invest in remote advice services for customers while they will increasingly be expected to use online banking or self-service facilities within branches instead of dealing with staff face to face.
Meanwhile, the group announced a 41% rise in underlying profits for the third quarter to £2.2 billion and said it remained confident in its plans to resume dividend payments after six years.
Chief executive Antonio Horta-Osorio said: “The business is performing strongly and we are well positioned to continue to support and benefit from UK economic growth.”
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Bottom line pre-tax profits were £751 million, after taking into account an additional £900 million set aside to pay for the Payment Protection Insurance (PPI) mis-selling scandal, taking the running total to £11.3 billion.
Three years ago Lloyds, which is 25% owned by the taxpayer after being rescued during the financial crisis, pledged to keeping total branch numbers at the same level but now says the commitment has expired.
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Mr Horta-Osorio said: “Over the last three years the successful delivery of our strategy has ensured that we have become a safe, highly efficient, UK-focused retail and commercial bank.
“The next phase of our strategy will use these strong foundations as a basis for meeting the rapidly-changing needs of our customers, and sets out how we will grow the business in a way that will deliver increasing and sustainable returns for our shareholders.”
Finance director George Culmer said of the pledge to keep branches open: “That was a specific commitment we made over the last planned period. We won’t be able to commit to that going forward.”
Lloyds said the move would see a net closure of 150 branches. Mr Culmer said Halifax branch numbers would be maintained and the business would add sites in Scotland where it currently has only three.
It said more than 90% of Lloyds and Bank of Scotland customers would continue to have a “useable branch” within five miles of their home.
The group said it would target closures in town centres where it currently has more than one branch.
Meanwhile, the 9,000 job cuts, around 10% of the current workforce, will fall throughout the business.
Mr Culmer said: “It is regrettable but this is about changing customer needs. We will work very, very hard to make sure that we lessen the impact as much as we possibly can on our people.”
Lloyds said its new “digitisation” strategy would see £1 billion invested in digital technology over the three-year period. The group is also targeting £1 billion cost savings by the end of 2017.
It said: “We will realign our branch capabilities to operate more efficiently, increasing self-service technology and investing in remote advice services, with an increasing number of counter transactions migrating to digital and self-service.”
Rob MacGregor, national officer of the Unite union, said: “These are deeply unsettling times for Lloyds staff, who after days of speculation and leaks face yet another round of job cuts and a future of uncertainty.
“Job cuts of approximately 10% could have unknown consequences on customer service and will put even more pressure on staff who have helped get the bank back on the right track.
“The wallets of top executives at Lloyds should not be getting fat by forcing low-paid workers on to the dole. If there are compulsory redundancies or customer service suffers then executive pay should be cut.”
Shares in the bank have been under pressure this week after the results of a European stress test to see how lenders would cope in maintaining the buffer of capital they hold in the event of a financial crisis.
Lloyds passed the test but performed the least well among UK banks, adding to fears that it may struggle when details of a further exercise by the Bank of England are published in December.
Mr Culmer expressed confidence that Lloyds would pass the test. But shares in the bank - also hit by the large additional PPI provision - fell 2%. The PPI increase came as complaints were higher than expectations.
The finance director added: “We would remain hopeful with regards to paying a dividend for 2014 full year.”
Branches across the region include: Nacton Road, Bramford Road and Cornhill North in Ipswich; Bury St Edmunds; Mildenhall; Thetford; Woodbridge; Beccles; Bungay; Lowestoft; Haverhill; Newmarket; Saffron Walden; Brightlingsea; Central Parade and West Avenue in Clacton-on-Sea; Clare; Crouch St, High Street, St John’s and University of Essex in Colchester; Frinton-on-Sea; Halstead; Sudbury and Tiptree.