UK banks announce significant staff reductions ahead of the festive season

UK banks announce significant staff reductions ahead of the festive season

UK banks to cut jobs before Christmas, triggering outrage from labor union Staff face layoffs in what is deemed as disgraceful timing, raising concerns about the impact on affected employees during the holiday season

UK bank staff are facing layoffs ahead of Christmas, a timing labeled as "disgraceful" by a labor union. Metro Bank announced plans to cut headcount by 20% in an effort to save £50 million ($63 million) annually, affecting around 800 roles. In addition, Lloyds and Barclays are also letting go of employees, adding to the wave of job losses in the industry.

Metro Bank, the first challenger to Britain's major main street banks when it opened in 2010, is currently reconsidering its policy of keeping branches open seven days a week. Despite a 3% increase in shares on Thursday, the lender's shares have dropped by 67% this year.

CEO Daniel Frumkin stated, "We are dedicated to maintaining our presence on the high street, while shifting towards a more cost-effective business model and prioritizing customer service."

Chris Beauchamp, the chief market analyst at stockbroker IG, warned that imitating the big banks Metro Bank sought to replace would significantly reduce the appeal of the lender. In a note, he wrote that Metro Bank's attempts to challenge the UK's established banks were falling short, and the bank continues to struggle.

Not only UK banks, but also major companies across various industries are reducing their workforce as the holiday season approaches. In November, Citigroup (C), Charles Schwab (SCHW), Vice Media, car parts maker Continental and shipping giant Maersk all announced job cuts.

Earlier this week, Unite, a labor union, reported that Barclays had notified employees of impending job cuts that would impact 900 staff members in the United Kingdom. This represents 2% of the bank's UK workforce, based on 2022 figures.

A spokesperson for Barclays stated that there would be "changes" to the headcount due to increased automation and a reduction in "management layers." However, they did not specify the exact number of job cuts. The spokesperson added, "We are implementing various measures to streamline and restructure the business, enhance service, and generate higher returns."

Unite described the decision to cut jobs this close to Christmas as "disgraceful."

UK banks announce significant staff reductions ahead of the festive season

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Its holiday season. For some, it will mean pink slips

Workers are experiencing genuine concerns about the impact of rising food and fuel prices on their families, given the possible risk to their jobs," stated Dominic Hook, the national industrial coordinator for Unite.

In the meantime, Lloyds will be reducing some positions as part of its strategy launched in February 2022, despite also hiring for roles in data and technology.

The spokesperson stated that making significant changes involves not only establishing new roles and enhancing the skills of colleagues in certain areas of the business, but also bidding farewell to talented colleagues who have contributed to the group's past success. The statement did not disclose the number of affected roles or the specific business areas.

While rising interest rates have increased profits for most UK banks by making lending more profitable, they have also raised funding costs, created competition for customer deposits, and heightened the risk of borrower defaults.

Initially, higher rates were considered to be beneficial for UK banks, but over the past year, they have been viewed as a disadvantage. Citi analyst Andrew Coombs noted the inverse correlation between banks' share prices and the official interest rate set by the Bank of England, which has been raised to 5.25%, the highest level since February 2008, following 14 consecutive rate hikes.

Metro Bank also announced that new stock issued in a recent emergency equity raise to stabilize its finances would start trading on Thursday. Shareholders had approved the rescue deal last week, which involves Colombian billionaire Jaime Gilinski Bacal taking control of the bank.