New chief executive António Horta-Osório expected to unveil major cost-cutting drive this week
Up to 15,000 jobs face the axe at Lloyds Banking Group this week when new chief executive António Horta-Osório unveils plans to cut costs in an attempt to return the bailed-out bank to long-term financial health.
Presenting the outcome of his three-month strategy review on Thursday, the Portuguese-born banker will also signal his ambition to start paying dividends again next year when the EU ban on payouts to shareholders is lifted.
But analysts also expect him spell out the uncertainties he faces in achieving these goals – including international rules on how much capital banks must hold and the UK independent commission on banking's wish to see banks ring-fence their high street operations away from their investment activities.
The commission, chaired by Sir John Vickers, also wants Lloyds to divest more branches than the 632 the EU has already instructed the bank to sell, and is in discussions with Lloyds about how to bolster competition on the high street.
Horta-Osório wants to gather indicative bids for the 632 branches by July, to pre-empt any findings on the matter in the final Vickers report, which is due on 15 September.
Having earned a reputation as a cost-cutter at Spanish bank Santander, Horta-Osório, the City believes, will set out plans to axe an extra £1bn of savings, on top of the £2bn a year already being achieved as a result of the takeover of HBOS during the 2008 banking crisis.
Some 28,000 posts have already been lost as a result of the integration, and analysts estimate that another 15,000 jobs will now be cut.
Lloyds would not comment, but at a recent select committee hearing, Horta-Osório said his strategy would be "evolutionary", and that it would involve retrenchment of the bank's international operations. The Scottish Widows insurance operation is also expected be retained, and Horta-Osório has begun to rejuvenate the Halifax brand – inherited from HBOS – and position it as a competitor to Lloyds' high-street operations.