Lloyds Banking Group Plc (LYG - Free Report) is planning to cut 865 jobs amid the uncertainties related to the coronavirus pandemic. The move marks the revival of the bank’s restructuring plans (announced in January) that were put on hold till October, when the coronavirus outbreak took shape of a pandemic.
Llyods, which employs a total workforce of 65,000, is also going to create 226 new positions. This will result in a net reduction of 639 jobs.
With its plans to resume job cuts, the bank is following its global peers. NatWest Group plc (NWG - Free Report) is likely to slash more than 500 jobs in its retail business, along with a closure of one office in London. Further, Mitsubishi UFJ Financial Group intends to reduce the bank’s staff by an additional 2,000 by fiscal 2023.
Notably, most of the reduction will be in Llyods’ insurance and wealth management divisions following its joint venture with Schroders, the fund management company. However, the bank informed that any employee affected by the plan will not be rendered jobless until November at the earliest.
A Lloyds spokesperson said, “We will seek to redeploy wherever possible, with all colleagues given access to a package of training and support designed to help them secure their next position, whether within or outside of the group.”
While a number of banks like ING Groep N.V. (ING - Free Report) and Credit Suisse AG (CS - Free Report) have reduced their physical presence by closing down their branches, Llyods has avoided this route so far. However, with declining footfall amid consumers’ shift to digital banking due to the pandemic, the bank is mulling to revive a plan of shutting down 56 branches.
The pandemic-induced volatile economic environment has dented the bank’s profitability this year. Llyods reported a loss of 602 million pounds ($743 million) for the first half of the year. This was primarily due to the provision of 3.8 billion pounds ($4.7 billion) to cover future credit losses as it expects a rise in bankruptcies and job losses due to the pandemic which is expected to affect customers’ ability to pay back debts. Further, a low interest-rate environment is likely to hurt the company’s margins in the near term.
Shares of Lloyds have lost 60.1% so far this year compared with the 30.8% decline recorded by the industry.
Currently, Lloyds carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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