Lloyds Banking Group has announced that it will shed 15,000 jobs over the next three years as part of its strategic review.
The strategic review was launched by Antonio Horta-Osorio, its new chief executive who left Santander UK to join Lloyds on March 1.
The bank says it plans to simplify the group to improve service and deliver £1.5bn of annual savings in 2014, through better end-to-end processes and IT platforms, as well as a delayered management structure and simpler legal structure.
The total cost of the programme will be approximately £2.3bn.
It says the cost savings will enable an additional £2bn of investment over the period 2011 to 2014 to grow its core customer franchise.
Lloyds Group expects to cease trading in 15 of the 30 countries it currently offer services in and will instead focus on UK operations and revitalising its Halifax brand.
The report says: “We will revitalise Halifax as a leading challenger brand in UK retail banking and invest behind Lloyds TSB and Bank of Scotland as leading relationship brands. We will also make a commitment to keep total branch numbers at the same levels through the period, and not to offshore further UK permanent operational roles.”
The lender has also reaffirmed its commitment towards Scottish Widows.
The bank however does not make any new mortgage lending commitments.
The four areas its cost savings will come from are:
- Operations and processes: It will conduct an end-to-end redesign of its processes, which will include significant process automation, and will materially reduce the number of IT applications. It says this will improve the customer experience increase productivity, and reduce risk, complexity and costs.
- Distribution and channels: It intends to create a ‘highly efficient distribution platform’, through streamlining its product suite and migrating products to digital distribution channels, encompassing the internet, mobile applications and telephony.
- Sourcing:It says it will optimise its demand management, simplify specifications and further strengthen supplier relationships, reducing the number of suppliers to the Group from around 17,000 to under 10,000, and further focusing on a core group of lead suppliers, to achieve approximately a 15 per cent saving on addressable spend.
- More agile organisation: It says it plans to create a more agile organisation through further delayering its management structure, centralising control functions, and creating a simpler legal structure.
In the report it says: “Our focus will be on reduction in middle management, bringing our top team closer to the customers and front-line staff, and are today committing to keeping total branch numbers at the same levels excluding the EU mandated sale through the period, and to the present policy of no further offshoring of UK permanent operational roles.
“We expect a reduction of 15,000 roles as a result of the simplification programme over the period.”