British banks announce sweeping job cuts weeks before Christmas
Metro Bank said Thursday that a cost-cutting plan would lead to around 800 job cuts.
By Hanna Ziady, CNN
London (CNN) — Staff at UK banks face layoffs in the lead-up to Christmas in what one labor union called “disgraceful” timing.
Struggling Metro Bank said Thursday that it expected to slash headcount by 20% as part of efforts to save £50 million ($63 million) a year. The announcement, which will affect around 800 roles, came on the same day that Lloyds confirmed plans to let go of some employees and follows news earlier this week that Barclays (BCS) is shedding 900 jobs across its UK business.
Metro Bank, which opened in 2010 as the first challenger to Britain’s major main street banks, is also reviewing its unconventional policy of keeping branches open seven days a week. The lender’s shares gained more than 3% Thursday, but are still down 67% so far this year.
“We remain committed to stores and the high street but will transition to a more cost-efficient business model while remaining focused on customer service,” CEO Daniel Frumkin said in a statement.
But Chris Beauchamp, chief market analyst at stockbroker IG, said becoming more like the big banks Metro Bank sought to displace would “sorely diminish” the lender’s appeal. “Far from being a serious challenger to the UK’s established banks, Metro continues to flounder,” he wrote in a note.
UK banks are far from the only major employers trimming staff numbers as the holiday season approaches. In November alone, Citigroup (C), Charles Schwab (SCHW), Vice Media, car parts maker Continental and shipping giant Maersk were among those that announced job cuts.
Earlier this week, labor union Unite said Barclays had informed staff of redundancies affecting 900 employees in the United Kingdom. That amounts to 2% of the bank’s UK workforce, based on 2022 numbers.
A spokesperson for Barclays said there would be “changes” to headcount, as a result of increased automation and fewer “management layers,” but did not put a number on any job cuts. “We are taking a number of actions to simplify and reshape the business, improve service and deliver higher returns,” the spokesperson added.
Unite described the decision to cut jobs this close to Christmas as “disgraceful.”
“With jobs at risk, workers face real worries about how their families will cope as food and fuel prices rise,” Unite’s national industrial coordinator Dominic Hook said in a statement.
Lloyds, meanwhile, will cut some roles as part of changes aimed at achieving the strategy it launched in February 2022, even as it is hiring for data and technology positions.
“Making big changes means not only creating new roles and upskilling colleagues in some parts of the business but also having to say goodbye to talented colleagues who have been a part of the group’s success in the past,” a spokesperson said in a statement, without disclosing how many roles would be affected and in which business areas.
Although rising interest rates have lifted most UK banks’ profits by making lending more lucrative, they have also pushed up their funding costs, sparked competition for customer deposits and increased the risk of borrowers defaulting on loans.
“Higher rates were deemed to be a positive for UK banks initially, but for much of the past year have been seen as a negative,” Citi analyst Andrew Coombs wrote in a research note last month. He pointed to the inverse relationship between moves in banks’ share prices and the official interest rate, which the Bank of England has taken to 5.25% — its highest level since February 2008 — after 14 consecutive rate hikes.
Metro Bank also said new stock issued as part of an emergency equity raise last month to shore up its finances would begin trading Thursday. Last week, shareholders approved the rescue deal, which involves Colombian billionaire Jaime Gilinski Bacal taking control of the bank.
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