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Jun 10, 2009

Fury as Lloyds closes Cheltenham & Gloucester branches and cuts 1,660 jobs

  • All 164 branches of the 160-year-old building society to close
  • Cuts come on day taxpayer's stake increases to more than 45%

Lloyd Banking Group provoked a furious reaction from unions and MPs tonight over its plans to shut all 164 Cheltenham & Gloucester branches and cut a further 1,660 jobs.

The decision, which came on the day the taxpayer's stake in the bailed out bank rose temporarily to 45.74%, takes the total job cull at the UK's largest high street bank to more than 4,000 since it was created in January by Lloyds TSB's rescue of HBOS. Further job cuts, as many as 25,000, are expected from the combined 140,000 workforce during the three-year integration.

The entire C&G network is to close by November after more than 150 years and more than 15 years after the Gloucester-based building society was taken over by Lloyds TSB.

The sudden move prompted speculation that Lloyds was trying to head off a move by the EU, which the bank had already warned could demand drastic sell-offs of parts of its operations to counter concerns about anti-competitiveness.

The Unite union attacked the decision as "nothing short of disgraceful". Its general secretary, Derek Simpson, warned that closing the C&G network would "rip the heart out of hundreds of local communities up and down the country". Unite also said today 500 staff at RBS have been told that they are at risk of redundancy as part of an existing job cut programme.

John McFall, chairman of the Treasury select committee, told MPs Lloyds had betrayed "the dignity of the workforce". He urged Treasury secretary Kitty Ussher to "join me in writing to Cheltenham & Gloucester to ensure that people are treated properly when it comes to being unemployed".

McFall was particularly furious the job cuts had been leaked, leaving the bank scrambling this morning to inform staff of the plan drawn up by Helen Weir, who is responsible for retail banking.

About 1,000 employees will lose their jobs as a result of the C&G closures, while the bank is cutting 265 positions across its personal loans division, which will lead to job losses in Chester and Cardiff, with other jobs also going across its retail, personal finance and mortgage sales operations.

Intelligent Finance, a brand launched to much fanfare by HBOS at the height of the dotcom boom, is to be closed to new mortgage business.

Lloyds said compulsory redundancies would be "a last resort". Weir said: "We will work through these changes carefully and sensitively and continue to consult closely with our unions throughout."

She stressed C&G would continue to be used as a mortgage brand through brokers, alongside Birmingham Midshires, Halifax and Scottish Widows. For the first time, Bank of Scotland will start to sell its own-brand mortgages in its branches, rather than those of the Halifax, the country's biggest mortgage lender.

The enlarged bank is operating a multi-brand strategy, although it is dropping the Clerical Medical name, which was part of HBOS. This is unlike the Spanish bank Santander, which recently announced plans to unite Abbey, Alliance & Leicester and Bradford & Bingley under its red flame logo.

The taxpayer stake in Lloyds yesterday rose to more 45% after the Treasury pumped in a further £1.7bn to enable the bank to exchange preference shares for ordinary shares, although the stake will slide back to 43% once the "rump" shares from the placing are sold. In the process some £2.3bn was repaid to the taxpayer.

Simpsonsaid: "UK taxpayers have not poured billions of pounds into this organisation just to see it sack thousands of hard-working people. This is truly a dark day for the financial services sector in this country."

Alex Potter, banking analyst at City broker Collins Stewart, said the closures could be a "sop" to the regulators, even though Gordon Brown allowed UK competition rules to be broken when HBOS was rescued.

The EU has yet to pronounce on the deal. "There are still antitrust concerns about the Lloyds-HBOS merger at commission level," Potter told BBC Radio 4's Today programme.

Source : Guardian
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