Lloyds banking Group's new chief executive swung the axe yesterday, announcing 15,0000 job cuts on top of the 28,000 already made at the state-backed bank in the past two years.
Antonio Horta-Osorio said the cuts over the next two-and-a-half years were needed to get the bank in shape to support the British economy.
Unveiling his long-awaited strategic review, Mr Horta-Osorio said: "I do regret that we have to do this. We would much prefer to put this bank back on its feet without having to reduce 15,000 jobs. It is a must."
He said the bank was losing money, needed to be more "agile" and had to get in shape so the Government could sell its 41 per cent stake.
But unions reacted with fury to the news, accusing Mr Horta-Osorio of reckless action that will add to the economic gloom.
David Fleming, the national officer of the Unite union, said: "The massive cuts announced today, coupled with the directive to sell some 600 branches, does nothing for customers or businesses to ease the financial pressures they face, only creating more insecurity across the economy."
Most of the cuts will be in the UK but will also include casualties from the decision to slash more than half Lloyds' 30 overseas outposts. The job cuts are meant to save £1.5bn a year with a third reinvested in the business.
Mark Brown, the general secretary of the in-house LTU union, called for 5,000 jobs in India to be moved back to the UK. "It seems Lloyds is cutting jobs and costs simply in order to stand still," he said.
Mr Horta-Osorio said the bank would try to make the cuts from the 10,000 people who leave the bank every year. The cost savings are on top of the £2bn made from its rescue acquisition of HBOS at the start of 2009.
The bank was rocked by losses from HBOS's loans and Lloyds' £3.5bn first-quarter loss included £1.1bn of write-offs on HBOS's Irish loans.
Mr Horta-Osorio, who joined from Santander in March, said a major plank of his plans was to breathe new life into HBOS's Halifax, which was once an aggressive rival to Lloyds. "Halifax is going to compete not only with Nationwide and Santander but with Lloyds," he said. "You have to have the courage to cannibalise yourself."
Other aims include:
* keeping the Scottish Widows insurance business to sell more products to Lloyds' 17 million bank customers;
* increasing non-lending income in wholesale banking by adding foreign exchange and other services;
* targeting the affluent to increase income per customer by 50 per cent by 2014;
* boosting the net interest margin and reducing reliance on wholesale funding by 2014.
The City reacted positively, sending the shares up nearly 10 per cent to 49p. The shares are still well off the average 73.6p the Government paid for its stake.
Paul Mumford, a senior fund manager at Cavendish Asset Management, said: "His approach is uncompromising but shareholders should feel reassured that the new Lloyds chief will not shy away from difficult decisions. The decision to focus on the UK market is sensible as the group's international operations delivered little value."
Mr Horta-Osorio said his plan was based on a slow UK recovery but that there were "significant" risks of a second recession or a sovereign debt crisis knocking it off track.Reuse content