Terry Murden: Upbeat data from rivals highlights woes of Lloyds and its workforce

Published on Tuesday 10 November 2009 19:39

THE job losses at Lloyds Banking Group and Royal Bank of Scotland – 8,700 in total – have made it a grim couple of weeks for the financial services sector.

Although they were hardly unexpected, the cutbacks will not ease the uncertainty that continues to plague the banks.

The final details about who gets the bullet are yet to be hammered out. But even then, those who remain will continue to look over their shoulder – the banks may tell us that they want greater transparency, but that doesn't guarantee there will not be another round of redundancies sometime soon.

There is some comfort in knowing that the figure of 5,000 job cuts by Lloyds include some vacancies that will not be filled, which effectively brings the number of people affected down to nearer half that total. Likewise in Scotland, there will be 500 redundancies and 500 posts unfilled or taken account of through redeployment and so on.

But whichever way they are dressed up, these two announcements represent a lot of households losing a salary. If there is some longer-term hope it is that the banks will recover and begin re-hiring – and that new entrants to the sector will take up some of the slack.

Jobs are always the emotive factor in restructuring, but that also makes them prey for political posturing.

Vince Cable, the Liberal Democrats' normally erudite spokesman on the financial crisis, misses the point when he says it is a terrible irony that many of these job losses are because the operations of Lloyds TSB and HBOS were merged.

Job losses are an unfortunate result of many mergers as duplication is cut out to improve efficiency. It therefore does not follows that just because there will be job losses a merger should not go ahead.

A greater irony is that the job cuts at Lloyds and RBS have coincided with third-quarter figures from Barclays and HSBC that indicate a division is emerging between banks that received state aid and those that have avoided the bail-outs.

While Barclays and HSBC benefited from the injection of funds that propped up the whole financial system, they have shown a (slow) return to form that evades their rivals. Barclays Capital, the investment banking arm, showed strong income growth and the trading statement from HSBC revealed profitability for the first nine months of 2009 ahead of expectations.

Tesco asserts itself

IF THERE is one company no-one can bet against it is Tesco. A slight but important upward move in its share of the grocery market indicates that little can stand in the way of the retail juggernaut. The 0.1 per cent rise may not sound like a reason to celebrate, but the lift from 30.6 per cent to 30.7 per cent was the first for Tesco for two years, evidence of an increasingly fierce grocery war that has drawn in competitors across the sector.

Not so long ago we were being told that everyone would be shopping at Aldi, Lidl and Netto, the upstarts that appeared to be spreading across Britain at a rapid pace. The big four fought back with ranges of discount own-label goods. The challenge from the discounters also faded as food price inflation eased.

There is evidence that this is also happening at the top end of the market, where Waitrose is battling with Marks & Spencer which has just announced plans to introduce other brands to its food stores.

The middle of the market is little changed, with Asda consolidating in second place and Sainsbury in third, though the Co-op, with its Blowing in the Wind advertising, is trying to build on its acquisition of Somerfield to make inroads.

Tesco will hope to entice future shoppers through its beefed-up financial operations. It is almost certain to install more bank counters in its superstores rather than acquire high street branches in the fire sale now taking place among the established banks.

With one in three shoppers buying their groceries at a Tesco store, it makes sense for the company to take advantage of their loyalty. The double Clubcard points promotion helped Tesco bring more grocery shoppers into its stores. In future they may find the same benefits when they go in search of their insurance policies and mortgages.