More than 2,500 jobs are at risk at Lloyds Banking Group, which is poised to become the latest financial institution to announce cost cuts, the Guardian can reveal.
Britain’s largest high street lender is understood to be considering axing a series of middle-management roles including analyst and product management posts as part of a consultation that is expected to be shared with staff next week.
The latest announcement, which follows reports that up to 2,000 jobs could go at Barclays, will raise fears of mass job losses in the City. So far, most redundancies in the sector have been confined to highly paid bankers, including Goldman Sachs letting thousands go earlier this year. UBS is in the process of merging with Credit Suisse, which is also expected to lead to a reduced headcount.
Sources inside Lloyds indicated that, while 2,500 roles are being reviewed – equivalent to one in 20 of the total – management hope the number lost will end up being lower. A source familiar with the consultation said the bank expected to create a net 120 UK jobs at the end of the process, but was changing the focus of certain roles.
City sources said that the move by the group, widely seen as a barometer for UK economic health, is a sign of its £4.5m-a-year boss Charlie Nunn’s “no-nonsense approach”.
A month ago Lloyds reported better-than-expected quarterly earnings, with pre-tax profits rising to £1.9bn.
It and other banks have benefited from the recent 14 consecutive Bank of England interest rate rises, which enabled them to make money on the difference between what they charge borrowers and savers. However, now that rate rises appear to have reached a plateau this “net interest margin” has begun to fall, raising concerns about a squeeze on future income.
Lloyds warned in its latest results that mortgage lending was also proving challenging given tougher conditions in the housing market as a result of higher borrowing costs. Lloyds shares are down 10% this year and the bank is now valued at £27bn.
Lloyds and Halifax announced branch closures earlier this year, affecting 40 sites, adding to an industry tally of more than 200 branches shutting.
The reports that Barclays has begun working on plans to cut 1,500 to 2,000 jobs in a £1bn cost-cutting drive come weeks after the bank’s bosses warned of the need to restructure to boost profits and dividend payments to shareholders.
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The shake-up is expected to affect mainly back office jobs in departments such as compliance, human resources and legal, according to a source cited by Reuters.
The chancellor, Jeremy Hunt, said in his autumn statement on Wednesday that the government would explore options for selling off its remaining 38.6% stake in the high-street lender NatWest Group, with the public probably to be offered the chance to buy shares. Lloyds was previously part owned by the taxpayer, but the government sold its last shares in 2017.
A Lloyds Banking Group spokesperson said: “We are evolving our business to ensure we can do more for our customers and deliver the products and services they need. To achieve this, we’re delivering one of the largest transformations in UK financial services which includes reviewing how our business and technology teams work together effectively to deliver on our strategy and long-term growth.”
