Lloyds bank to shed 9,000 jobs and close 150 branches
LONDON: Lloyds Banking Group aims to shed 9,000 jobs and close 150 branches over three years to cut costs, the British state-rescued lender said, reporting improved profits.
LBG, which passed EU-wide bank stress tests at the weekend, is to shed about one-tenth of its workforce, as customers switch to banking online.
“Over the next three years, we need to adapt to the changes in financial services brought about by technology, changing customer behavior and increasing regulatory requirements, at a time when traditional competitors’ strategies converge and new entrants compete for customers,” LBG said in a statement.
The bank also announced on Tuesday that it had returned to profit in the third quarter — or three months to September 30 — posting pre-tax earnings of £751 million ($1.2 billion, 952 million euros) compared with a loss of £440 million in the equivalent period one year earlier.
But it is setting aside another £900 million to cover the costs of compensating clients who were mis-sold an insurance policy — a scandal which has rocked Britain’s banks and cost LBG more than £11.3 billion including the latest provision.
The bank, which remains 25-percent owned by the British taxpayer, has already axed tens of thousands of staff since the 2008 financial crisis which triggered a multi-billion-pound state bailout of the lender.
Following Tuesday’s announcements, LBG’s share price was down 2.39 percent to 73.54 pence in late morning deals on London’s benchmark FTSE 100 index, which was showing a gain of 0.31 percent to 6,383.25 points.
Analysts said the share price was hit by the new huge provision for payment protection insurance.
“Lloyds Banking Group has once again increased its provision for PPI mis-selling… and when you look at figures like this, it’s understandable that the market isn’t getting all that excited about the prospect of £1.0 billion annual cost savings which have been promised but not until 2017,” said Tony Cross, market analyst at trading group Trustnet Direct.
British banks lost a high court appeal in 2011 against tighter regulation of PPI which provides insurance for consumers should they fail to meet repayments on a credit product such as personal loans, mortgages or payment cards.
PPI became controversial after it was revealed that numerous consumers had been sold the insurance without understanding that the cost was being added to their loan repayments. Britain has since banned simultaneous sales of PPI and credit products.
Lloyds was meanwhile sunk prior to the PPI scandal by an ill-fated 2008 takeover of rival lender HBOS, causing it to axe more than 40,000 jobs in a bid to return to profitability and the private sector. As LBG recovers, the government is gradually reducing its stake to help reduce the state’s debt.
Towards the end of the third quarter meanwhile, LBG announced it had dismissed eight workers and withheld bonuses in disciplinary measures linked to the Libor interest rate-rigging scandal.
This was after British and US regulators fined LBG £218 million for rigging inter-bank lending rates.
The Libor scandal erupted two years ago when Barclays was fined £290 million for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009. Euribor is the eurozone equivalent of Libor.
The Libor system was found to be open to abuse, with some traders lying about borrowing costs to make their bank seem more secure or boost their trading positions. A number of global banks have since been fined over the affair.