x Abu Dhabi, UAEFriday 28 July 2017

Lloyds TSB regional operation on a knife-edge as cuts announced

The future of Lloyds TSB in Dubai is in doubt after the bank announces plans to half its international network and cut 15,000 staff.

Lloyeds TBS has been forced to reduce staff numbers during the past few years, says the bank's managing director Richard Musty.
Lloyeds TBS has been forced to reduce staff numbers during the past few years, says the bank's managing director Richard Musty.

The future of Lloyds TSB Middle East hangs in the balance after the British lending giant announced it would slash costs and staff numbers across its international operations.

The bank's parent, Lloyds Banking Group based in London, is mulling the future of its international operations, which include a branch in Dubai with a staff of about 250.

Lloyds, which was forced into a merger with Halifax Bank of Scotland before being nationalised by the UK government during the bleakest weeks of the financial crisis in 2009, is closing operations in 15 of the countries where it does business and refocusing on its home market to save £1.5 billion (Dh8.82bn) over the next three years.

"We will focus on attractive UK customer segments, reduce our international presence, and continue our disciplined reduction of non-core assets, to ensure sustainable, predictable returns on equity above our cost of equity," the bank said.

"We will also refocus our international business on UK expatriates and others with UK connections."

Markets responded to the cuts with glee, as Lloyds' shares jumped more than 9 per cent in early trading. The bank is 41 per cent owned by the UK government.

For the bank's retail, commercial and corporate customers in the UAE, the outlook is uncertain.

"That detail hasn't been worked out yet," a Lloyds spokeswoman said when asked if Dubai operations would be affected by the changes.

Lloyds TSB moved quickly to reduce exposure to the property sector in the months preceding the start of Dubai's economic problems, limiting the effects of the emirate's property downturn, Richard Musty, the managing director of Lloyds TSB Middle East said in May.

But the bank has nevertheless been forced to reduce staff numbers during the past few years, he added.

The past 12 months have brought job cuts and reorganisations to many of the operations of British banks operating in the UAE.

Royal Bank of Scotland sold its retail banking operations to Abu Dhabi Commercial Bank last summer, while both HSBC Middle East and Barclays Bank have reduced staff numbers in the UAE since April. Only Standard Chartered has avoided major staff cuts.

ghunter@thenational.ae