Lloyds Banking Group has announced its first round of job cuts since putting restructuring plans on hold at the start of the pandemic.
The UK’s largest high street lender said it would eliminate 865 roles, starting in November, which would be partially offset by the creation of 226 new positions elsewhere in the business.
The reductions will not affect any branches, with the bulk of the losses focused on roles in Lloyds’ insurance and wealth division that were no longer needed after the creation of a new joint venture with Schroders.
Banks have come under pressure to cut costs as rising loan defaults due to the impact of Covid-19 have hit incomes that were already struggling as a result of record-low interest rates.
Lloyds was one of several major banks that agreed to pause job cuts earlier in the year, but plans have accelerated in recent weeks as lenders refocus on longer-term cost pressures.
Last month NatWest, formerly Royal Bank of Scotland, said it would cut more than 500 roles across its branch network, while the Co-operative Bank said it would reduce headcount by 10 per cent and close a quarter of its branches.
Rob MacGregor, national officer at the trade union Unite, said in relation to the cuts at Lloyds: “The pandemic has demonstrated the amazing resilience and flexibility of this workforce. The employer should not focus solely on cutting jobs and costs but, instead, the bank should invest in a workforce that has only shown loyalty, dedication and hard work through the good times and the bad.”
Ged Nichols, general secretary of Accord, which also represents Lloyds’ staff, warned that “it's clear from LBG's announcement that we can expect more job losses".
Lloyds said: “We recognise that change does mean making difficult decisions,” but added that the reductions were part of pre-pandemic plans to “simplify parts of our business”.
Lloyds fell to a £602m loss in the first half of the year, mainly due to a £3.8bn charge to cover expected future credit losses. Analysts are hopeful that loan losses will be lower in the second half, but pressure on revenues is expected to continue after the Bank of England slashed interest rates from 0.75 per cent to 0.1 per cent.
Lloyds estimated in its last annual report that each 25 basic point drop in the base rate would knock almost £150m from its annual net interest income.
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