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Metro Bank said Thursday that a cost-cutting plan will result in around 800 job cuts.
London CNN –
Staff at British banks face redundancies in the run-up to Christmas, in what a union has described as “disgraceful” timing.
Troubled Metro Bank said on Thursday it expects to reduce headcount by 20% to save 50 million pounds ($63 million) a year. The announcement, which will affect around 800 jobs, came on the same day that Lloyds confirmed plans to lay off some staff and follows news earlier this week that Barclays (BCS) is cutting 900 jobs across its UK business.
Metro Bank, which opened in 2010 as the first competitor to Britain’s major high street banks, is also reviewing its unconventional policy of keeping branches open seven days a week. The lender’s shares rose more than 3% on Thursday but are still up 67% so far this year.
“We remain committed to stores and retail, but will transition to a more cost-effective business model and remain focused on customer service,” CEO Daniel Frumkin said in a statement.
But Chris Beauchamp, chief market analyst at stockbroker IG, said the lender’s attractiveness would “decrease significantly” if it became more like the big banks that Metro Bank sought to displace. “Far from being a serious challenger to Britain’s incumbent banks, Metro continues to falter,” he wrote in a note.
British banks are far from the only major employers cutting headcount as the holidays approach. In November alone, Citigroup (C), Charles Schwab (SCHW), Vice Media, auto parts maker Continental and shipping giant Maersk were among them which announced job cuts.
Earlier this week, union Unite said Barclays had informed staff of redundancies affecting 900 employees in the UK. This represents 2% of the bank’s UK workforce, based on 2022 figures.
The union described the decision to cut jobs so close to Christmas as “disgraceful”. CNN has reached out to Barclays for comment.
“With jobs at risk, workers face grave concerns about how their families will cope with rising food and fuel prices.” Dominic Hook, Unite’s national industry coordinator, said in a statement.
Lloyds, meanwhile, will cut some jobs as part of the changes aimed at delivering on the strategy launched in February 2022, although the company is currently recruiting for data and technology roles.
“Major changes mean not only the creation of new roles and the upskilling of colleagues in some areas of the company, but also the farewell to talented colleagues who have contributed to the success of the group in the past,” a spokesman said in a statement, but without Disclosure how many roles in which business areas would be affected.
Although rising interest rates have increased the profits of most British banks by making lending more lucrative, they have also boosted their profits Financing costs rose, competition for customer deposits intensified and the risk of borrowers defaulting on loans increased.
“Higher interest rates were initially viewed as a positive for U.K. banks, but have largely been viewed as a negative over the past year,” Citi analyst Andrew Coombs wrote in a research note last month. He pointed to the inverse relationship between the performance of banks’ share prices and the official interest rate, which the Bank of England raised to 5.25% – the highest level since February 2008 – after 14 consecutive rate hikes.
Metro Bank also said new shares issued last month in an emergency capital raise to shore up its finances would begin trading on Thursday. Last week, shareholders approved a rescue deal that would see Colombian billionaire Jaime Gilinski Bacal take control of the bank.