Lloyds cutting 4,500 jobs is inevitable result of merger, says analyst
Jobs in both the UK and India for the axe
Job losses are inevitable with mergers
Lloyds has announced that 1,600 permanent staff and 1,150 contractors will lose their jobs in the UK, while 1,750 overseas employees will also lose their jobs over the next two years.
The jobs losses are the result of an integration of IT operations between Lloyds and HBOS, which it acquired during the financial crisis in 2008. It is not yet clear which roles will be most affected by the cuts.
Alex Kwiatkowski, principal analyst at Ovum, said there was a certain inevitability about the job losses. "Whenever you combine businesses there will be rationalisation across all areas,” he said.
"There has been a lot of technology transformation going on in Lloyds over the last five years. They’ve obviously taken a long hard look at how they’re going to run their business. It’s about what synergies they can achieve by combining IT operations and roles and looking at things sensibly without introducing operational risks."
Kwiatkowski said that the move by Lloyds to cut jobs was a pragmatic one, given recent heavy criticism of the bank. “It’s already had its fingers burned with accusations of inadequate due diligence for acquiring HBOS and saddling itself with a large amount of bad debt in the effort to grow bigger. It saw a big prize and leapt for it without thinking of the consequences.”
Other banks were likely to follow, he said. “They won’t be the only bank making redundancies in their IT function. I can see a lot of excess capacity in other places. When it comes to the challenges that banks face, there’s not going to be some magic loosening of the purse strings.”