Lloyds Bank to axe jobs as part of its restructuring plans

Summary

• Llyods bank announced to cut around 865 jobs and simplify its business as part of its restructuring plans.

• Llyods bank has restarted the restructuring plans that began before the outbreak of the coronavirus pandemic.

• Llyods bank’s February 2020 announcement of 780 job cuts was put on hold due to the coronavirus pandemic.

• Lloyds bank has plans to add about 226 new roles, which suggested that there would be an actual reduction of only 639 jobs.

As part of its restructuring plans, Llyods Banking Group plc (LON: LLOY) has announced to cut around 865 jobs and simplify its business. It is to be recalled that Lloyds began the restructuring plans before the outbreak of the coronavirus pandemic. The bank has however restarted the plans now. On 9 September 2020, the British bank said its February 2020 announcement of 780 job cuts was put on hold due to the coronavirus pandemic. The British lender clarified that the new job cuts are on top of earlier plans.

Llyods informed that majority of the axed jobs would affect the bank’s insurance, wealth, and retail divisions. Among the affected roles at Llyods, most would comprise of the staff employed in back-office positions, who generally do not interact with the customers. Llyods bank additionally stated that the employees hurt by the decision to cut jobs would start leaving in November 2020 at the earliest. Lloyds also has plans to add about 226 new roles, which suggested that there would be an actual reduction of only 639 jobs from its total workforce of around 65,000. However, the lender mentioned that it would make considerable efforts to redeploy the affected staff wherever possible.

It is to be informed that Llyods bank stopped its plans to simplify the business soon after the outbreak of the coronavirus pandemic. Some of the key decisions taken by Lloyds included making full payment to the staff regardless of their working conditions. The bank also assured that any staff having the redundancy notice would not leave the bank before October 2020.The bank remained committed to both the decisions. But, with the latest announcement Llyods bank confirmed a net reduction of 639 roles. The lender reiterated that these changes reflected its existing plans made before the pandemic to make simpler parts of its businesses.

A quick glance on job cuts at Llyods bank

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Views of the trade union Unite

Presenting its worries about the prospects of the staff at Llyods who are being asked to go in the present frenzied job market, the trade union Unite asked the bosses at Llyods to guarantee everyone who would be impacted by the job cuts are provided with an option to get a new job at the bank. Unite welcomed the creation of 220 new jobs at the bank but commented that this would not comfort the ones who would have to deal with an uncertain future. The union was firm on its stand that it was entirely unacceptable that Llyods bank has put unnecessary pressure on those who remain employed with the bank by making hundreds of their colleagues redundant on a regular basis.

Unite union also stressed that the bank’s staff had shown substantial resilience during the coronavirus pandemic. Unite further added that instead of axing jobs and cost cutting measures, the Llyod bank needed to invest in a workforce that demonstrated loyalty, hard work, and dedication in both good and bad times. Unite is dedicated to serve interests of its members.

Stock performance of Llyods Banking Group plc

On 10 September 2020, the company’s stock (LON: LLOY) was trading at £26.42 down 0.1 per cent from its previous day’s close of £26.48. The 52-week low high range was recorded as 26.21 and 67.25. With a market capitalisation (Mcap) of £ 18,702.18 million, the stock provided a negative return on price, which was minus 58.53 per cent on a year to date (YTD) basis. The earnings per share at the time of reporting was recorded at 0.04.

Job cuts in recent times

As per the estimates from latest data, more than 300,000 jobs were at risk of redundancy in June and July 2020. This number is seven times higher than the 2019 levels. The restaurant major Pizza Hut is considering shutting approximately 29 of its 244 outlets in the UK, which is likely to affect around 450 jobs. The main British franchisee of the company from the United States (US) has sought to cut rents for its outlets in Britain.

Under a restructuring deal called a company voluntary arrangement (CVA), the franchisee has requested the landlords to base the payment demands on turnover generated at each outlet. The deal would not affect the Pizza Hut delivery business as it is separately owned. The details of the CVA by Pizza Hut are soon expected to be announced. The CVA would make Pizza Hut the latest among the hospitality companies to look at insolvency means to reorient business during the coronavirus pandemic. Pizza Hut has a total workforce of 5,000 people in the UK.

The coronavirus-led lockdown, social distancing rules after reopening, and fears of catching the Covid-19 infections have been accountable to hurt the business at restaurant groups that were financially strained even before the outbreak of the coronavirus pandemic. These circumstances have compelled the companies to initiate cost cutting measures and axing jobs.

Similar moves have been noted at other companies like Pizza Express and Azzurri Group (owner of Ask Italian & Zizzi) due to shutdowns and job redundancies. Other companies that have minimised itself are Carluccio and Casual Dining Group that owns Bella Italia, Café Rouge, and Las Iguanas.

The UK government has stressed that it has protected around 9.6 million jobs through its Job Retention Scheme and paying loans and grants worth billions to thousands of businesses in the UK.

Conclusion

The coronavirus-led crisis has accelerated job cuts in recent times and several experts believe that it would continue in coming times as well. The latest announcement by Llyods bank has been part of the restructuring plan that it initiated even before the pandemic hit the UK and made situations even worse. Companies across the sector are forced to take tough decisions of making jobs redundant due to the uncertainty of the speed of economic recovery in coming times. Some businesses in the hospitality sector that have suffered majority of job cuts are known to have been financially strained even before the pandemic. Experts suggest that during the pandemic, the companies need to be creative in generating demands and grow sales rather than just resorting to job cuts and closures.