Sainsbury's cuts banking jobs

J Sainsbury has embarked on a major cull of jobs at its struggling banking arm.

J Sainsbury has embarked on a major cull of jobs at its struggling banking arm.

The supermarket group wrote to all 350 employees of Sainsbury's Bank last week warning them that their jobs were at risk. The move comes just weeks after the company, which is in the throes of a recovery programme, axed 600 posts at its head office in Holborn, London.

Sainsbury's Bank is a joint venture with HBOS. It has had a poor six months, forcing the group to admit that income growth has been below expectations for the past two quarters and triggering profit downgrades from several analysts.

A spokeswoman for the group said the jobs cuts were part of a company-wide attempt to streamline the business. "It's about making a leaner, fitter organisation. People have been advised this is the scenario. Now we're going through the normal consultation process," she said.

Industry sources believe a substantial number of jobs are at risk, but the company's spokeswoman declined to comment further. The bank's employees are split between Holborn, HBOS's headquarters in Edinburgh and sales teams across the country. All staff have been warned about the risk of redundancies. They will be offered the chance of accepting a job elsewhere in the group.

Sainsbury's is trying to cut £400m of operating costs over the next three years to give it firepower to fund its sales-led recovery strategy. It has also employed 3,000 more staff in its supermarkets to try to overcome the massive problems it has had with product availability.

The poor performance of Sainsbury's banking arm is in stark contrast to Tesco's banking business, which reported profits of £200m last year, which it split with its partner, Royal Bank of Scotland.