Blog Coverage Cost Cutting Strategy Leads Lloyds Banking Group to Close 100 Branches and Axe 325 Jobs
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LONDON, UK / ACCESSWIRE / April 6, 2017 / Active Wall St. blog coverage looks at the headline from UK's Banking and Financial Services major Lloyds Banking Group PLC (NYSE: LYG) as the Company announced the locations of the 100 branches that it plans to close on April 05, 2017. These 100 branches are expected to close between July 2017 - October 2017 and will result in over 325 job cuts. Register with us now for your free membership and blog access at:
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One of Lloyds Banking Group's competitors within the Foreign Money Center Banks space, Banco Santander, S.A. (NYSE: SAN), is estimated to report earnings on April 26, 2017. AWS will be initiating a research report on Banco Santander following the release of its next earnings results.
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The 100 branches identified include 54 branches of Lloyds Bank, 22 Branches of Halifax and 24 branches of Royal Bank of Scotland. The branch closures are part of the LBG's long-term strategy of cost-cutting and are part of the Group's plan announced in mid-2016. The cost-cutting plan envisioned the closure of 400 branches and 12,000 job cuts. After the completion of this exercise and at the end of FY17, LBG will continue to have the largest banking networks in UK with 1,950 branches.
Rationale behind the branch closures
LBG's justified its decision by saying that the consumers were inclined to making increasing dependent on online banking and were moving away from face-to-face banking. On April 04, 2017, LBG had announced the re-classification of its branches. The "micro" branches will have just two banking staff and will be equipped with tablet computers to handle their job responsibilities. Some of the smaller branches would not even have counters and instead be equipped with self-serving machines to handle routine cash and cheques and LBG's mortgage advisers would interact with client via video links.
LBG also revealed plans to open a fleet of "mobile" branches for Lloyds Bank and Bank of Scotland networks. These mobile branches will offer services in the area where the LBG's branches have been shut down. It plans to deploy nine mobile branches immediately and expects to have 20 mobile branches by end of FY17.
Commenting on the matter LBG spokesperson said:
"Our branches will continue to play a vital role in our multi-channel approach to meeting the full range of customer needs, and we expect to continue to have the biggest branch network in the UK. We are committed to working through the changes announced today in a careful and sensitive way."
Response of Unite (the Union representing the employees of LBG)
The Unite Union's representatives were angry with LBG's decision to close 100 branches and the resultant 325 job cuts.
Sharing his views on the branch closure, Rob MatecGregor, National Officer of Unite said:
"Unite is angered that another 200 staff have today been told that their job will be cut due to their branch shutting. Lloyds Banking Group's rationale for branch closures is the claimed customer preference towards the use of technology across banking. However, this simply doesn't ring true when it's clear that many customers still value the face to face engagement with experienced and knowledgeable bank staff."
The Union feels that the closure of bank branches is detrimental to the clients in rural communities, disabled clients, and small business owners, who depend on services offered by the bank branches in their localities.
Other Banks in UK closing branches too
Many banks in UK have announced the closure of bank branches in recent months and given the changing consumer behavior and increasing use of online banking as the reason for their decision. According to Unite, over 1,500 retail bank branches have been closed since 2014.
In March 2017, Royal Bank of Scotland and NatWest announced the closure of 158 branches and more than 400 job cuts. In January 2017, HSBC announced the closure of 117 bank branches and 204 job cuts. HSBC has closed a total of 321 branches since January 2015. In the same month, Yorkshire and Clydesdale Bank closed 79 branches and announced over 400 job cuts.
Industry experts feel that this will negatively impact the poor and rural section of the population the most. They will be left without access to proper banking facilities. Many adults do not know how to use online banking and those living in rural and remote areas are hindered by unreliable broadband connectivity.
Stock Performance
At the close of trading session on Wednesday, April 05, 2017, Lloyds Banking Group's share price finished yesterday's trading session at $3.21, slipping 3.31%. A total volume of 7.14 million shares exchanged hands. The stock has advanced 14.23% in the past six months. Furthermore, since the start of the year, shares of the Company have gained 3.55%. The stock is trading at a PE ratio of 22.29 and has a dividend yield of 2.80%. The market capital of Lloyds Banking Group was $55.88 billion at its most recent closing price.
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