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Metro Bank said Thursday that cost-cutting plans will result in the loss of about 800 jobs.
London CNN –
Staff at Britain’s banks are facing layoffs ahead of Christmas in what a labor union has described as “disgraceful” timing.
Struggling Metro Bank said on Thursday it expected to cut its workforce by 20% in efforts to save £50 million ($63 million) a year. The announcement, which will affect around 800 roles, comes on the same day as Lloyds confirmed plans to make some staff redundant and follows news earlier this week that Barclays (BCS) is axing 900 jobs across its UK business .
Metro Bank, which opened in 2010 as the first challenger to Britain’s major high street banks, is also reviewing its unconventional policy of keeping branches open seven days a week. Shares of the lender rose more than 3% on Thursday, but they are down 67% so far this year.
CEO Daniel Frumkin said in a statement, “We remain committed to the stores and the high street, but will transition to a more cost-efficient business model focusing on customer service.”
But Chris Beauchamp, chief market analyst at stockbroker IG, said becoming more like the big banks Metro Bank seeks to displace would “severely diminish” the lender’s appeal. “Instead of posing a serious challenge to Britain’s established banks, Metro continues to falter,” he wrote in a note.
Britain’s banks are far from the only major employer to cut headcount 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. Who announced job cuts.
Earlier this week, labor union Unite said Barclays had informed staff about redundancies affecting 900 employees in the United Kingdom. Based on 2022 numbers this represents 2% of the bank’s UK workforce.
A Barclays spokesperson said there would be “changes” to headcount as a result of increased automation and fewer “management layers”, but did not give the number of any job cuts. “We are taking a number of steps to simplify and reshape the business, improve service and deliver higher returns,” the spokesperson said.
Unite described the decision to cut jobs so close to Christmas as “disgraceful”.
“With jobs at risk, workers face real worry about how their families will cope with rising food and fuel prices,” Dominic Hook, Unite’s national industrial co-ordinator, said in a statement.
Meanwhile, Lloyds will cut some roles as part of changes aimed at achieving the strategy launched in February 2022, even as it recruits for data and technology positions.
“Making major changes means not only creating new roles in some parts of the business and training colleagues, but also saying goodbye to talented colleagues who have been part of the group’s success in the past,” a spokesperson said in a statement. ” Disclosing how many roles will be affected and in which business areas.
Although rising interest rates have increased the profits of most UK banks by making loans more attractive, they have also increased their profits Funding costs, competition for customer deposits increased and the risk of borrowers defaulting on loans increased.
“Higher rates were initially seen as a positive for UK banks, but have been viewed as a negative for much of the last year,” Citi analyst Andrew Combs wrote in a research note last month. He pointed to the inverse relationship between fluctuations 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. after.
Metro Bank also said trading of new stock issued as part of an emergency equity raise last month to shore up its finances will begin on Thursday. Last week, shareholders approved a rescue deal that includes giving Colombian billionaire Jaime Gilinsky Bacal control of the bank.