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

30th June 2011, Comments 0 comments

Britain's bailed-out Lloyds bank announced on Thursday the axing of 15,000 jobs to halve its international division and save £1.5 billion (1.66 billion euros, $2.4 billion) per year by 2014.

Lloyds Banking Group (LBG) announced that it would cut 14 percent of its staff following a strategic review, as new chief executive Antonio Horta-Osorio seeks to transform the loss-making lender's fortunes.

The company's share price surged by more than eight percent as investors applauded the review, which is aimed at returning the group to profitability to enable the British government to sell its 41-percent stake.

In a bad day for staff at British banks, HSBC cut 700 jobs.

The announcement by LBG means it has now slashed more than 40,000 jobs since 2009 as it looks to nurse its way back to health after a part-nationalisation at the height of the global financial crisis,

"We have three compelling reasons for change: We must return to profitability as quickly as possible, we must support the UK economy and we must pay taxpayers' money back," Portuguese national Horta-Osorio, 47, told reporters.

Under the new strategy, Lloyds will also make major investments in its Lloyds TSB, Halifax, Bank of Scotland banks and the Scottish Widows insurance business.

The lender, who was sunk by the ill-fated 2008 takeover of rival bank HBOS, will seek to cut its international activities to 15 nations by 2014, compared with the current level of 30.

A Lloyds spokeswoman declined to comment on which countries the group would exit.

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 departures and redeployment rather than redundancy.

"It's important to note that these (cuts) 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."

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.

However, 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."

Horta-Osorio's predecessor Eric Daniels left Lloyds amid intense shareholder anger after he oversaw the government-brokered takeover of HBOS, in a move which proved disastrous for the group.

In afternoon London trade, the share price of LBG rocketed 8.02 percent to 48.235 pence, topping the benchmark FTSE 100 index.

© 2011 AFP

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