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LLOYDS TO CUT 20,000 STAFF AFTER HBOS DEAL

Sunday November 2,2008

By Geoff Ho

Lloyds TSB is preparing to make up to 20,000 staff redundant as part of its planned takeover of ailing mortgage bank HBOS.

It is understood Lloyds wants to reduce the headcount at the combined bank by 15,000 to 20,000, although it is believed the total number of redundancies may be increased because the plans have not been finalised.

Additionally, hundreds of branches will be shut in the merger rubber-stamped by business secretary Lord Mandelson last Friday.

The Financial Sunday Express has obtained details of the job losses and branch closures as Lloyds publishes the prospectus for the HBOS deal as early as tomorrow. HBOS is also expected to report losses of £5billion on credit investments this week.

Lloyds will have a combined workforce of 140,000 once the HBOS deal is complete. According to people familiar with the matter, it hopes to achieve a substantial proportion of the planned losses through natural wastage.

It is understood the areas that have been targeted for branch closures are those where HBOS and Lloyds sites compete for business. Where a town has both a Lloyds TSB and an HBOS branch, the one that does less business will be closed.

Lloyds TSB owns more than 2000 branches in the UK and HBOS has more than 1200.

Mandelson cleared the deal on Friday by ruling it was in the public interest, despite the fact that the combined bank will dominate the mortgage and retail banking markets.

According to a Competition Commission report, the combined bank will have 20 to 30 per cent of the mortgage market and a commanding 33 per cent of the retail banking market, making it the market leader.

“I recognise there are some concerns about the possible effects of the merger on competition,” Mandelson said.

“I am asking the Office of Fair Trading to continue to keep the relevant markets under review to protect the interests of UK consumers and the British economy.”

Lloyds plans to ask investors to approve the HBOS deal at an extraordinary general meeting which is scheduled to be held towards the end of the month.

HBOS will hold its EGM in mid-December and — barring any unforeseen problems — the deal should be completed in January.

Last week Lloyds announced its executives would take all but two of the top jobs at the combined bank. It has also pledged that, if HBOS’s directors are paid off, it will publish details of the payouts.

HBOS chief executive Andy Hornby and chairman Lord Stevenson will leave the group without any pay-off.