New Lloyds bank boss set to wield jobs axe

30th June 2011, Comments 0 comments

The new boss of Britain's state-rescued Lloyds Banking Group is due Thursday to axe thousands more jobs in a bid to transform its fortunes and save £1.0 billion ($1.6 billion, 1.1 billion euros) a year.

Chief executive Antonio Horta-Osorio, who was parachuted into the job in March after being poached from Santander UK, is due to present a strategic review and could unveil another 15,000 jobs cuts, according to media reports.

Lloyds Banking Group (LBG), which is 41-percent state-owned after a huge bailout at the height of the global financial crisis, has already slashed 27,500 jobs since 2009, as it looks to guide its way back to health.

Portuguese-born Horta-Osorio, 47, will spell out his masterplan to turn around the loss-making bank, which was sunk by the ill-fated 2008 purchase of former rival Halifax Bank of Scotland, or HBOS.

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

The new chief is planning to trim the bank's overseas activities and strip away layers of management, but will retain the Halifax brand and its Scottish Widows insurance arm, according to media reports.

He could also reveal that Lloyds is due to exit the Bank of England's special liquidity scheme, which was established in 2008 to help banks borrow funds amid the international credit crunch and global financial crisis.

Such loans are due for repayment in January, when the British central bank will close the scheme.

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 steered the bank into partial state ownership.

Horta-Osorio could meanwhile signal when LBG might intend to restart the payment of shareholder dividends, and decide whether to sell off more branches.

Britain's Independent Commission on Banking called in April for Lloyds to sell more assets, on top of the 600 branches it has been forced to sell by the European Commission in return for approval of the state aid it has been given.

The Commission, delivering initial findings on financial stability and competition, also called for banks to protect retail operations from investment banking activities -- and set aside more capital to prevent more state bailouts.

Lloyds has consistently declined to comment on media speculation that it was planning a fresh assault on jobs.

The bank bounced back in 2010, delivering its first annual profit since the 2008 takeover of HBOS, as it managed to slash the level of bad debts or consumer loans that have turned sour.

However, Lloyds lurched back into losses in the first quarter of 2011 after setting aside £3.2 billion to compensate customers who were mis-sold insurance.

LBG revealed in May that it made an enormous net loss of £2.4 billion in the three months to the end of March. That compared with a slender net profit of £169 million in the first quarter of 2010.

© 2011 AFP

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