Unions reacted with anger on Tuesday after Lloyds Banking Group revealed plans to axe 9,000 jobs and close 200 branches as it “digitises” its business.
The 24%-taxpayer owned bank announced its latest round of job cuts – which come on top of 45,000 posts already lost since the rescue of HBOS in 2008 – as it stunned the City by taking a further £900m provision for misselling payment protection insurance. This takes its total bill so far to more than £11bn.
Outlining a new three-year strategy for the bank, chief executive António Horta-Osório said: “This is a highly competitive market and customers behaviour are changing. Increasingly our customers want to access ours services in many different ways, via branches, via digital or via mobile”
“Regrettably”, he said, this would require 9,000 job cuts from the 85,000-strong workforce as the business was “digitised”. The move is intended to save £1bn by 2017, the period over which the job cuts are expected to take place.
Lord Blackwell, the bank’s chairman, said its digital transformation comes against a backdrop of “a pace of change across the UK financial services sector that is unprecedented, with more fundamental change happening over the next 10 years than has happened over the last 200 years”.
But officials at Unite responded angrily. “The wallets of top executives at Lloyds should not be getting fat by forcing low-paid workers onto the dole. If there are compulsory redundancies or customer service suffers then executive pay should be cut,” said Unite national officer Rob MacGregor, who said the union would be pressing for no compulsory redundancies.
“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,” he said.
The 200 branch closures – 6% of its network – will largely affect its Lloyds and Bank of Scotland facias and not its Halifax branches. Lloyds stressed that 90% of customers will have a branch within five miles of their homes, signalling the end of its commitment to be “the last branch in town”. More Halifax branches could be open and the bank reckoned 50 more could be opened in total, meaning 150 would be shut at the end of the three years.
The new hit for PPI mis-selling kept Lloyds profits flat at £1.6bn for the first nine months of the year despite a 59% fall in the charge for bad debts, which have been one of the biggest impediments to profits since the bailout.
The City is awaiting news of the bank’s ability to start paying dividends for the first time since the 2008 crisis. There have been concerns over its ability to resume payments to shareholders, particularly after Lloyds emerged as the weakest of the UK banks in the latest stress check of the banking industry announced on Sunday.
George Culmer, the finance director, said the bank still hoped to be able to pay a dividend for the financial year 2014 after discussions with the Bank of England. Threadneedle Street will publish the outcome of its own stress tests on 16 December and Culmer indicated that he expected Lloyds to pass them.
Horta-Osório, whose bonus is linked to the share price, said the bank had become “ a safe, highly efficient, UK-focused retail and commercial bank”.
The government has reduced its stake in Lloyds from 43% but has signalled that no more shares will be sold before the election in May. As the stock market opened, the shares were down 1% at 74.2p, just above the 73p average price at which taxpayers ploughed £20bn into the bank in 2008.
The Guardian, UK
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