No plot to axe HBOS workers, claim Lloyds bosses

Published on Thursday 23 April 2009 22:08

FRESH fears about the future of thousands of financial jobs in Scotland have been raised after Lloyds Banking Group announced that it will axe almost 1,000 posts.

The banking giant yesterday revealed that 985 staff would go in what is the first round of job cuts since it took over troubled Halifax Bank of Scotland (HBOS) earlier this year.

Lloyds Banking Group, which is 43 per cent government-owned, said a mixture of full and part-time posts would be axed over the next two years in its motor finance business.

The vast majority of those affected are based south of the Border – with 200 jobs going at its centre in Speke on Merseyside this year and 340 at risk in Chester next year.

However, there are growing fears that employees in Scotland may be next to suffer cuts.

The staff at Speke and Chester are former HBOS employees who worked for the Bank of Scotland Dealer Finance business, which Lloyds Banking Group has decided to close.

That has raised concern that former HBOS staff are being singled out as the banking giant seeks to slash its costs following the controversial takeover in January. The rest of the job losses will affect the national sales force spread across the UK.

But Lloyds Banking Group last night dismissed any suggestion that former HBOS staff were being targeted. There has been speculation that as many as 40,000 of the group's 140,000 jobs will be shed to achieve the "synergistic benefits" that Lloyds chief executive Eric Daniels has said would be needed to make efficiency savings of 1.5 billion.

With the HBOS half of the company having 16,000 of its 72,000 staff north of the Border, there are fears that Scottish employees will bear the brunt of further job losses. Scottish Liberal Democrat leader Tavish Scott last night articulated the heightened unease many Lloyds Banking Group staff in Scotland are feeling following yesterday's announcement.

He said: "We warned Gordon Brown that the takeover of HBOS by Lloyds would result in sweeping job losses. Scottish employees of the new Lloyds supergroup will be worried that they will be next in line."

In a bleak day for Britain's financial industry, insurance giant RSA also announced plans to close its site in Bristol by June 2010 with the loss of 500 jobs.

Unions expressed dismay at the announcements, which followed Wednesday's rise of 177,000 in unemployment, to a 12-year high of 2.1 million.

Rob MacGregor, national officer of the Unite union, said that the Lloyds announcement would cause fresh uncertainty for staff across the company – which includes 22,000 based in Scotland – and demanded that Britain's biggest retail bank avoids resorting to compulsory redundancies in this initial round of job cuts.

"Unite see this announcement as the first test for the newly formed Lloyds Banking Group to demonstrate its commitment to avoid compulsory redundancies," he said.

"For the 985 people in LBG to learn that they are to lose their jobs will cause uncertainty for staff across the company."

Mr MacGregor added: "The company must be creative in finding cost savings, with redeployment and retraining measures central in its strategy. The union will oppose any compulsory job losses."

Mark Elliot, a spokesman for Lloyds Banking Group, said the decision to close the Bank of Scotland Dealer Finance business had already been taken before the merger, following a detailed review of operations carried out last year by management at HBOS.

"The decision is several months old, made by changes in the Bank of Scotland before the merger," he said.

Customers who took out finance to buy cars will now have their deals transferred to Black Horse, the Lloyds TSB arm that also offers car finance.

Mr Elliot said the remainder of the 985 posts cut would be among both Lloyds and HBOS staff, proving that the latter were not being singled out.

He added: "Lots of numbers have been bandied around about job cuts – 20-something, 40-something (thousand] – but that is just speculation.

"However, we've made it very clear there will inevitably be job losses when you bring two large companies together."

WHERE MORE CUTS WILL BE MADE AS STREAMLINING CONTINUES

THE axe fell yesterday on staff working in HBOS's motor finance division, as Lloyds Banking Group seeks to streamline what is Britain's largest retail bank.

It is, however, almost certain that further cuts will be made as the takeover of HBOS by Lloyds TSB has left the banking giant with a number of overlapping functions.

&#149 Mortgages – HBOS is the UK's biggest mortgage lender and savings bank. It has 258 billion of retail deposits and about 15 million savers. Lloyds TSB, which does the bulk of its mortgage lending under its Cheltenham & Gloucester brand, is the UK's third-biggest lender in terms of outstanding home loans.

&#149 Call centres – The merged organisation is certain to seek savings here. HBOS and Lloyds TSB were major providers of personal loans and credit cards, two areas which do a lot of business over the phone.

&#149 Branches – Lloyds TSB has about 190 in Scotland, while HBOS has 320. However, as more customers are opting to use internet and phone banking rather than a traditional high street branch, this poses its own threat to jobs.

&#149 Administration – The merging of two banks that each employed about 70,000 means savings are likely to be found in back office functions.

&#149 Asset management – Lloyds owned Scottish Widows Investment Partnership in Edinburgh before inheriting Insight, the London asset management arm of HBOS.

Analysis: Banks deal further blows to hopes of economic growth

TWO further blows struck at the heart of the financial sector yesterday: news of 985 job losses at Lloyds Banking Group and a warning from the head of Barclays that the problems in the banking industry are far from over and this recession is going to be very deep.

The announcements strike at the heart of Chancellor Alistair Darling's Budget optimism that the economy will recover to growth of 1.5 per cent next year and 3.5 per cent in 2011.

That's difficult to imagine while the financial sector continues to shed jobs and the banking system itself is likely to prove vulnerable to further shocks in the months ahead.

Both in New York and London, optimism that the worst of the recession may be over has given way in recent days to concern that this may be a misleading rally and that the global economy could be heading for a downturn more prolonged than markets – even after the heavy falls of the past 12 months – are allowing for.

The problems over toxic debt are not going away and, indeed, that pile of problem loans will continue to increase the longer the recession persists.

The job losses at Lloyds Banking Group are centred on the closure of Bank of Scotland Motor Finance, which is "no longer financially viable". Most of the losses will be at two centres in England.

These are the first major job cuts resulting from the takeover of HBOS, which created a banking giant employing 140,000. The fear within the group is that staffers previously within HBOS will be particularly vulnerable to further cutbacks.

Sources within the enlarged group tell me of very low morale among HBOS staffers, particularly on the business banking side, where they feel they are being treated like pariahs. "Everything we do is second-guessed and we're very much second-class citizens on the ship," said one.

Such a guarded attitude by Lloyds is understandable, given the huge losses sustained by Bank of Scotland Business Banking, and it will take time for the surviving staff to be fully integrated into the larger group.

As for the outlook, the warning yesterday from the chief executive of Barclays, John Varley, that the UK recession will be "deep and prolonged" was akin to a bucket of cold water being thrown over Mr Darling and his Treasury advisers. "It seems likely", Mr Varley told shareholders at the annual meeting, "that we're going to be living in difficult times, at least for another year."

He warned that the banking industry could face more troubled times. "Although it seems the worst of the financial crisis in the banking sector is now behind us, there will no doubt be further thunder and lightning from time to time."

Earlier this week, the IMF forecast that Britain's economy will contract by 0.4 per cent next year – in marked contrast to the Budget forecast of 1.5 per cent growth.