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High Street ‘haircut’: British banks axing thousands to reduce costs

Published time: January 29, 2014 11:58
Edited time: January 29, 2014 13:22
Reuters/Toby Melville

Reuters/Toby Melville

Three of the UK's biggest lenders – Barclays, Lloyds and the Royal Bank of Scotland – plan to massively cut staff and close a large number of branches. British banks are struggling to cut costs, as multi-billion dollar regulatory costs eat their profits.

Barclays is to cut a quarter of its 1,600 branches in the UK and fire hundreds of investment banking division employees under the cost cutting program, as it seeks to reduce spending by $2.8 billion (£1.7 billion) by next year, according to the Financial Times (FT).

Another British lender Lloyds Banking Group also said it would cut 1,080 jobs and outsource more in a bid to decrease costs as part of the restructuring plan announced in 2011. The Royal Bank of Scotland, which is expected to be charged another £3bn for mis-selling, will announce its cost-cutting programme next month, according to the Mirror newspaper.

Experts say the cuts also highlight the banks’ efforts to take advantage of fast-developing technology such as smartphone applications and contactless payments to cut their costs, the FT says.

“This is a fundamental 100-year transformation of the banking industry, that’s what I think we are seeing,” the FT quotes a person familiar with the Barclays plan.

The financial crisis has shown the need for stricter financial regulation, with banks looking to be more prudent. Barclays, for example, will present its new five-year financial targets next month, which, among other things, will include a target for a core tier one capital ratio – a crucial measure of its financial strength. Another target will update the earlier promise to drive the return on equity above its cost of capital by 2016, the FT says.

In the case of Barclays’, improving its efficiency and cleaning up the culture became a key objective for its boss Antony Jenkins when he replaced Bob Diamond in 2012 who resigned over the manipulation of the benchmark Libor rate . The lender is still recovering from a $456 million (£290 million) fine for Libor rigging.

Comments (9)

 

mergon 02.02.2014 15:04

Well for one they are not cutting hair any longer .
And as for moving to India to get a job ,im not going to move to Bradford to do that.

 

Zeitgeisttt 31.01.2014 05:32

Hansel 29.01.2014 12:43



The customers should boycott that bank and transfer their accounts to a different one....let Barclays go down once and for all..

  



The customers should transfer their accounts to a credit union....

 

Digby Green 30.01.2014 18:14

I once read that hair dressing is one of the few occupations that cannot be out socurced!

I f we all moved to India we would all get jobs there!

View all comments (9)
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