Lloyds should bow to public will

Published on Thursday 23 April 2009 22:08

THE carve-up of HBOS by its new owner, Lloyds Banking Group, has begun. Yesterday Lloyds announced it was effectively closing the HBOS car finance unit, with the loss of nearly 1,000 jobs across the UK. The combined group has a workforce of 140,000 people.

These are the first major job cuts resulting from the much-criticised takeover of HBOS. It is to be hoped it is not significant that the losses come from the HBOS side of the business.

Last year, the government virtually handed HBOS to Lloyds, setting aside normal competition rules to let the takeover go ahead. An unsuccessful campaign was mounted by HBOS customers and former staff to keep the bank a separate entity, which would have been better for Scottish jobs and consumer choice. An independent HBOS would still have required government assistance, but – as subsequent events showed – so did Lloyds.

The danger now is that Lloyds - now 65 per cent owned by the taxpayer - cherry-picks the best parts of the old HBOS. The group argues that in the current state of the car market, the HBOS motor finance unit was "no longer financially viable". However, it will hardly be good for internal bank morale if former HBOS staff think they are the first to go in any restructuring.

Lloyds is publicly owned. Its management has a responsibility to the taxpayer. It must take that into account when making redundancies.