Several UK banks are set to cut jobs in the lead-up to Christmas, drawing criticism from labor unions. Facing financial struggles, Metro Bank announced plans to cut 20% of its workforce, impacting around 800 roles. The move is part of the bank’s efforts to save £50 million ($63 million) annually. Lloyds also confirmed its plans to let go of some employees, and earlier in the week, Barclays revealed it would be shedding 900 jobs across its UK business.
Metro Bank, established in 2010 as a challenger to traditional UK banks, is reviewing its policy of keeping branches open seven days a week as part of its cost-cutting measures. While the bank’s shares gained over 3% following the announcement, they are down 67% year-to-date. The CEO, Daniel Frumkin, emphasized the commitment to the high street but indicated a transition to a more cost-efficient business model.
Chris Beauchamp, chief market analyst at IG, expressed concerns that adopting practices similar to major banks might diminish Metro Bank’s appeal. He noted that the bank continues to face challenges rather than becoming a serious challenger to established UK banks.
The labor union Unite criticized the decision to cut jobs close to Christmas, calling it “disgraceful.” Unite highlighted the additional concerns faced by workers regarding rising food and fuel prices.
Barclays informed staff of redundancies affecting 900 employees in the UK, representing 2% of its UK workforce. The bank cited increased automation and reduced management layers as reasons for the job cuts. Unite criticized the timing of these decisions, expressing concerns about the impact on workers and their families.
Lloyds confirmed it would cut some roles as part of strategic changes launched in February 2022. The bank emphasized its commitment to creating new roles and upskilling colleagues, acknowledging the impact on talented individuals who have contributed to its past success.
While rising interest rates have boosted profits for UK banks by making lending more lucrative, they have also increased funding costs, intensified competition for customer deposits, and raised the risk of loan defaults. Metro Bank recently conducted an emergency equity raise to shore up its finances, and new stock issued as part of this effort began trading.
The collective job cuts in the banking sector align with a broader trend in November, with companies such as Citigroup, Charles Schwab, Vice Media, Continental, and Maersk announcing layoffs.
