UK Banks Announce Layoffs Ahead of Christmas Amid Economic Challenges

01 Dec, 2023

UK Banks Announce Layoffs Ahead of Christmas Amid Economic Challenges

In a controversial move, UK banks are initiating layoffs in the lead-up to Christmas, drawing criticism from labor unions. Metro Bank, facing financial struggles, announced plans to cut its workforce by 20%, affecting around 800 roles and aiming to save £50 million ($63 million) annually. Lloyds and Barclays have also confirmed layoffs, contributing to a series of job cuts in the banking sector this month.

Metro Bank, established in 2010 as a challenger to traditional British banks, is reviewing its unconventional policy of seven-day branch openings as part of cost-cutting measures. Despite a slight share price increase after the announcement, the bank's shares remain down 67% for the year. CEO Daniel Frumkin emphasized the commitment to customer service while transitioning to a more cost-efficient business model.

However, critics, including Chris Beauchamp, Chief Market Analyst at IG, argue that adopting practices similar to established banks could diminish Metro Bank's unique appeal. The bank's struggle to compete with traditional counterparts is evident in its declining shares throughout the year.

Beyond Metro Bank, other major employers, including Citigroup, Charles Schwab, Vice Media, Continental, and Maersk, have also announced job cuts in November. Barclays, in particular, is automating processes and streamlining management layers, leading to an unspecified number of job cuts. Labor union Unite criticized the timing of these layoffs, calling it "disgraceful" to jeopardize employees' livelihoods during the holiday season.

Lloyds, while cutting some roles, is concurrently hiring for data and technology positions as part of its strategy launched in February 2022. The impact on jobs in specific areas was not disclosed. Rising interest rates have influenced UK banks' profitability, making lending more lucrative but increasing funding costs and the risk of loan defaults.

Metro Bank recently underwent an emergency equity raise, with new stock trading as Colombian billionaire Jaime Gilinski Bacal assumes control, aiming to stabilize the bank's financial situation.