New bank giant forecasts £1.5bn cost cuts

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The Independent Online

Lloyds Banking Group said today that it expected annual cost savings of at least £1.5 billion by the end of 2011 after its acquisition of HBOS was completed.

The newly-formed group said Lloyds TSB had traded satisfactorily since its last update on December 12.

It added that, although the difficult market conditions suffered by HBOS last month have continued, there has been no major change in trading at HBOS businesses.

The takeover has created a banking giant with around 145,000 staff and 3,000 branches across the UK.

Competition rules were waived to allow the deal but unions are worried over thousands of possible job cuts through the tie-up.

The company previously flagged £1.5 billion in planned cost savings, but said today it expected a figure greater than this by the end of 2011.

Chief executive Eric Daniels said the group welcomed today's range of new guarantee and funding initiatives designed to support the economy.

"We believe these initiatives are necessary and that they represent a very significant commitment to address the funding issues facing banks.

"We will now study these proposals in detail and continue our ongoing, constructive dialogue with the Government about them."