Is it fair to blame Brexit for the pending cutbacks within Lloyds Banking group?
Professor Chris Rowley comments on the pending cutbacks within Lloyds Banking Group.
“Is it fair to blame Brexit for the cuts? Or is Lloyds Banking Group using this as an excuse?”
“While some of the hyperbole of pre-Brexit ‘Project Fear’ assertions have not come to pass, such as the assertion of the need for an immediate ‘Emergency Budget’ etc., some others are still doing the rounds. This includes those concerning Brexit’s impacts on financial services and banking, such as in terms of employment.
“Some of the most recent issues concern Lloyds Banking Group’s announcement of 3,000 jobs and 200 branches to be ruthlessly axed with the total number of jobs cut since 2014 reaching 12,000 by the end of next year and branch closures coming on top of the 200 already earmarked, despite first-half year profits doubling to £2.5 billion, but with further warnings that, ‘Brexit could have an adverse impact on future performance’.
“Well, yes it could. But, the obvious (and key) question is, ‘What impact?’
“This is a question is especially significant as negotiations on future terms and conditions have yet to even begin, yet alone been concluded. No doubt the ‘passport’ issue will be used again soon, even though employment costs, tax regimes and attractiveness of locations, as well as negotiations and deals, will all need to be analysed and considered in any decisions.
“Furthermore, we need to put the Lloyds’ announcement and Brexit assertion into context, as membership of the EU did not stop:
- Stupid and crass management behaviours and decisions resulting in reckless over-expansion and creation of ‘too big to fail’ organisations and ‘moral hazard’ – hence the Vickers proposals to ‘ring fence’.
- The 2008 financial crisis and bank rescues and yet £96b of fines on global banks since the bailouts for their atrocious and cynical behaviours.
- The £20 billion tax payers’ rescue of HBOS, which is still 9% owned by the public, but which has witnessed:
- 54,000 announced job cuts since 2008, plus the current ones.
- Fines, compensation and legal expenses for shocking failings, mis-handling, delays and evasions, such as PPI mis-selling, market manipulation and Libor rigging and even to trying to short-change Bank of England fees.
- Annual reward of £8.8 million in pay, bonuses and incentives for the Chief Executive and bonus pool of £353m, with 66 staff receiving £800,000 plus.
- Branch closures due to technological and lifestyle changes.
"Using Brexit is yet more window-dressing. It is an easy and convenient (also lazy and irrelevant) excuse for earlier problems and unacceptable poor practices within banking. Not least as Lloyds has confirmed it made the decision for these further cuts before the EU referendum and back in February, the Chief Executive was reported to have said that Lloyds would ‘thrive’ outside the EU. Additionally, Lloyds is the least exposed British bank to Europe. As an organisation, post-bailout, it has discarded its global operations and it is now mostly a domestic bank with a major share of other markets in current accounts, mortgages and savings.”
Chris Rowley is Professor of Human Resource Management at Cass Business School.