Lloyds Banking Group to cut 15,000 jobs

[June 30, 2011]  LONDON (AP) -- Part-nationalized Lloyds Banking Group plans to cut 15,000 more jobs and save 1.5 billion pounds ($2.4 billion) a year by 2014 as it works to return to full private ownership, the company said Thursday.

Lloyds also downgraded its guidance for return on equity from 15 percent to a range between 12.5 percent to 14.5 percent and said it intends to withdraw from more than half of the 30 countries in which it now operates, without giving exact details.

Taxpayers own 41 percent of the bailed-out group, which combined Lloyds TSB and Halifax/Bank of Scotland.

The bank said it hopes the planned cost savings will allow it to invest 2 billion pounds between now and 2014 to grow its business.

The market responded positively, bidding up Lloyds shares by 6.8 percent to 47.7 pence in early trading on the London Stock Exchange. The government paid about 74 pence per share for its stake.

The job cuts announced in the company's strategic review directed by new chief executive Antonio Horta-Osorio will bring the total to more than 40,000 since the group was created in a merger in 2009.

Horta-Osorio, a former Santander executive who joined Lloyds in March, said most of the job cuts were likely to be in middle management and back office roles rather than in branches.

Lloyds, which is Britain's biggest mortgage lender, is also planning to sell around 600 branches to comply with European Union conditions for receiving state aid, but the company pledged to keep all the remaining branches open.

"We will unlock the potential in this franchise over time by creating a simpler, more agile and responsive organization," Horta-Osorio said.

The Unite union said the review will cause "deep distress and anxiety."

"Astonishingly, one in eight roles will be lost over the next three years," said David Fleming, a national officer for the union. "This review is merely another box-ticking exercise to give this bank -- which has already, since its creation two years ago, cut over 27,000 staff -- an excuse to sack more employees."

Gary Greenwood, analyst at Shore Capital, said the targets appear to indicate that revenue is weaker.

"Overall, it feels like the previous management were too optimistic and so guidance has been rightly downgraded," he said.

[Associated Press]

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