Lloyds Banking Group has announced plans to reduce the number of its suppliers by more than 7,000 as part of efforts to save £1.5 billion in 2014.
Its other cost-saving initiatives include cutting 15,000 back office and middle management jobs, to make the company “more agile”. It only announced plans to cut 325 back office jobs three months ago, in April.
Last month, the bank predicted a pre-tax loss of £3.4 billion in the first quarter, despite continuing to make good progress with its IT and business integration programme, following the merger of Lloyds TSB and HBOS (Halifax Bank of Scotland) in January 2009.
In a report to investors today on the outcome of a strategic review, Lloyds said that it would simplify the group and deliver savings through improved IT platforms and end-to-end processes, a flatter management structure, and centralised support functions.
“We will optimise our demand management, simplify specifications and further strengthen our supplier relationships, reducing the number of suppliers to the group from around 17,000 to under 10,000, and further focusing on a core group of lead suppliers, to achieve approximately a 15 percent saving on addressable spend,” the bank said.
Lloyds also said that it will redesign its processes to included “significant” process automation and to materially reduce the number of IT applications. This is in addition to streamlining its product offerings and migrating products to digital distribution channels, including the Internet, mobile applications and telephony.
In terms of the job cuts, Lloyds said it would use natural attrition and internal redeployment rather than redundancy where possible, as well as remaining committed to its policy of no further offshoring of UK permanent operational roles.
Unite union claimed that Lloyds has so far cut more than 27,000 staff over the past two years, and that the strategic review was just an “excuse to sack more employees”.
“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,” said David Fleming, Unite national officer.
Meanwhile, Lloyds said that it was “on schedule” to complete most of its integration programme in the third quarter of this year, and to deliver cost savings of £2 billion a year by the end of 2011.