Lloyds slashes another 940 jobs as cuts deepen

Lloyds Banking Group continues to reduce headcount

Lloyds Banking Group is to cut 940 more jobs, the latest in a series of savage headcount culls at major financial institutions. Separate announcements earlier this week confirmed 200 human resources jobs would be axed, and a further 175 cuts made in the Halifax branch network.

Since 2009, Lloyds has made 31,000 redundancies as it attempts to return to profitability in the aftermath of the financial crisis. Other banks have made similar deep cuts in headcount, including Citigroup, which has announced 11,150 job cuts since November 2012 alone, and Morgan Stanley, which has cut 1,600 within the last three months. Cuts at UBS, where 10,000 employees will be axed by 2015 under the firm’s restructuring plan, represent 16% of the bank’s workforce, according to Bloomberg Industries.

Many of the cuts at the large wholesale banks took place in the investment banking sector – for example, it has been reported this month that Morgan Stanley plans to cut 15% of its investment banking staff in Asia. In September, Deutsche Bank cut 10% of its equities sales and trading staff; the bank cut some 2,000 jobs from its investment banking arm by the end of the year, and is also currently said to be considering a 20% bonus cut in Europe. However, the Lloyds cuts include offshoring 200 jobs in IT, as well as redundancies at the branch level.

Trade union Unite has condemned the cuts at Lloyds, calling on the bank to rethink its strategy rather than removing so many of its staff.

“Since 2009 Lloyds has slashed a quarter of its workforce. It is a complete disgrace that the bank, which is 41% owned by the taxpayer, continues to cut jobs in such a cavalier way. Unite opposes these cuts and will be doing everything possible to stop compulsory redundancies. ”

However, Lloyds has insisted that the cuts are a part of its strategic review, agreed in June 2011, in which it decided that it would cut 15,000 jobs between then and the end of 2014. “This is about streamlining the business and making services more efficient for customers,” said a spokesperson for the bank.

Other observers have suggested that the cuts represent a longer-term shift in the financial services industry. According to Simmy Grewal, senior analyst at Aite Group, banks are unlikely to see a return to the same level of profits that characterised the larger investment banks before the financial crisis.

Grewal: banking has fundamentally changed

“The industry has changed fundamentally,” she told Banking Technology. “Rising capital requirements make it harder to make money; without enough revenue, banks have no choice but to cut costs. The industry is saturated – the banks can’t maintain the scale they have been used to.”

Pointing out that during the period 2007-8, banks made deep cuts to their workforce only to hire back many of the same staff 18 months later, Grewal added that the lack of long-term planning at some institutions was a hindrance to their return to profitability. It might be better, she argued, for banks to specialise in their particular areas of expertise and cut back in sectors where they are simply duplicating the same commoditised services. Shared infrastructures, for example in the post-trade space, might offer a real improvement both for banks and their customers.

In November last year, Norwegian broker Christiania outsourced its own execution to another company, execution specialist Neonet. Although execution has traditionally been seen as a core part of a brokerage business, Christiania decided to focus on its research expertise as its core value-added service, cutting away the need to maintain any permanent staff or infrastructure for execution.

Separately, an unusual deal between Citi and UBS the same month to provide combined post-trade services in Asia Pacific has been characterised as a recognition of changed circumstances and new business opportunities, according by Andrew Murfin, regional head of UBS’s group operations, who focused on the advantages sharing infrastructure could have for both banks.