Lloyds Banking Group and insurance group Direct Line each announced hundreds of job cuts on Wednesday as they moved to lower costs as more customers embraced digital services.
Lloyds said it would abolish 780 roles in UK branches to reduce overheads as it battles record-low interest rates and rising competition. It said the latest round of job losses would affect Bank of Scotland, Lloyds and Halifax locations but no branches were expected to be closed.
“As customers are using our branches less often, we are reducing the number of roles across our branch network,” Lloyds said. “This means we can shape our service according to customer behaviour and local demand.”
The announcement comes a week after Lloyds warned profitability would drop over the next year — despite signs of an improvement in the UK’s economic outlook — as competition in the mortgage market and low interest rates weighed on revenues.
Scott Doyle, Lloyds committee chair at the union Unite, said the move was “yet more evidence of the bank’s profits over people culture”.
“Unite accepts that banking models constantly change and update but this doesn’t need to equate to walking away from community banking and the public who have been loyal to the bank,” he added.
Profit margins have been falling across the retail banking sector for several years due to depressed interest rates and rising competition.
Lloyds last week reported annual revenues of £17.1bn for 2019, down 4 per cent year on year. Net profits dropped 33 per cent to £3bn.
Direct Line said it would cut 800 jobs from a number of sites across the UK as part of a £50m cost-cutting drive.
Last November the group said it would look to reduce its annual expenses but did not say at the time whether that would involve job cuts.
The group said on Wednesday: “Like many companies we are having to prepare for changes in the way we operate reflecting changing customer behaviour where people are increasingly opting to interact with us digitally.
“We are therefore proposing a number of changes across the business which sadly mean the loss of jobs for some of our people,” it said.
The job cuts were first reported by Sky News.
They come as the UK personal insurance industry grapples with rising claim costs and relatively weak growth in premiums, which is putting profits under pressure.
Insurers say that the use of more technology in cars has driven up repair costs, while the recent flooding across the UK is expected to drive up home insurance claims.
Direct Line chief executive Penny James, who has been in the job for a year, said last November that she wanted the company to work in a “faster and nimbler way,” with more accurate pricing and better customer service.
The company employs about 11,000 people in the UK.