Lloyds bank axes 15,000 jobs in drastic cost-cutting plan

30th June 2011, Comments 0 comments

Britain's state-rescued Lloyds bank said Thursday it will axe 15,000 jobs in a drastic cost-cutting plan that will halve its international base and save £1.5 billion (1.66 billion euros, $2.4 billion) per year by 2014.

LBG will "simplify the group to improve service and deliver £1.5 billion of annual savings in 2014" via measures that will include a "reduction of 15,000 roles", the company said in a statement issued after a strategic review.

The major overhaul, carried out under the leadership of new chief executive Antonio Horta-Osorio, will seek to "streamline our international presence, from 30 countries to less than half that number by 2014", it added.

The loss-making group, which is 41-percent state-owned after a huge bailout at the height of the global financial crisis, has now slashed more than 40,000 jobs since 2009 as it looks to guide its way back to health.

The majority of the job losses will be in middle management and back-office roles, such as IT and support functions, and also in its international operations.

Lloyds stressed it would seek to shed staff through natural attrition and redeployment rather than redundancy. The job cuts amount to approximately 14 percent of the group's current workforce of about 106,000 people.

"It's important to note that these are roles not people. We have a strong record of minimising redundancies," said Horta-Osorio.

He added: "We have to do this. This bank has lost money, it's losing money this year on an after-tax basis.

"We have to get this bank back on to its feet to support the UK economy and we have to pay taxpayers' money back."

LBG suffered spectacular losses in 2008 and 2009, as bad debts rocketed in the wake of its 2008 takeover of HBOS, which was plagued by toxic or high-risk property investments.

The lender bounced back into profit in 2010 after slashing bad debts, but lurched back into losses in the first quarter of 2011.

"Our aim is to become the best bank for customers," added Horta-Osorio, the former head of Santander UK who was parachuted into Lloyds in March to help turn around its fortunes.

He added: "We will unlock the potential in this franchise over time by creating a simpler, more agile and responsive organisation, and by making substantial investments in better-value products and services for our customers, to deliver strong, stable and sustainable returns for our shareholders."

Thursday's news of more steep job cuts, announced amid a 24-hour walk-out by public sector workers in Britain, sparked intense anger from trade union Unite.

"The long-awaited results of the Lloyds strategic review will cause deep distress and anxiety across the company as staff face the reality of this arbitrary slashing of jobs," said Unite national officer David Fleming.

"The conclusion of this review to make 15,000 staff cuts is yet another extreme example of the financial services industry cutting vital staff in a desperate attempt to create a mirage of acceptability following the financial crisis."

However, LBG stock rallied by 6.21 percent to 47.43 pence early on Thursday on the London stock market as investors welcomed to the announcement. The FTSE 100 index was 0.56 percent higher at 5,886.35 points.

Horta-Osorio, who was previously head of British operations at Spanish banking group Santander, took over from Eric Daniels at the LBG helm.

American Daniels left Lloyds amid intense shareholder anger after he oversaw the government-brokered takeover of HBOS, in a disastrous move which helped steer the bank into partial state ownership.

© 2011 AFP

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