Lloyds Banking Group is set to reduce staffing in its risk management division as part of its ongoing transformation strategy. Following an internal review, the bank determined that its current approach to risk and controls was slowing progress and hindering competitiveness.
In a memo to staff, Chief Risk Officer Stephen Shelley outlined the need to “reset” the company’s approach to risk management, noting that two-thirds of executives felt the existing system was a barrier to progress. He also mentioned that fewer than half of the workforce believed the bank was encouraging “intelligent risk-taking.”
Shelley emphasized that the initial focus would be on non-financial risks, and a new model would help the bank move at a faster pace in its strategic objectives. He acknowledged frustration over time-consuming processes and outdated working practices, which he said had put the bank at a disadvantage relative to its peers.
The restructuring is expected to affect around 175 permanent roles, including 153 in the risk management division. However, Lloyds anticipates the creation of 130 new roles focused on specialist risk and technical expertise. The risk management division currently employs approximately 3,600 people.
The news of the job cuts comes amid Lloyds’ potential exposure to compensation costs related to the Financial Conduct Authority’s (FCA) review of now-banned motor finance commission arrangements. Analysts estimate that the probe could cost the auto lending sector up to £16bn, with Lloyds possibly facing the largest impact, potentially up to £3.5bn. In response, Lloyds made a £450m provision earlier this year to cover the anticipated costs.
A spokesperson for Lloyds commented that the changes would involve both new role creation and the reduction of certain positions, with efforts to support affected employees. The spokesperson clarified that after factoring in the new roles, approximately 45 role reductions would occur.
Lloyds, which employs around 60,000 people globally, is also continuing its broader transformation strategy, which includes a £4bn investment plan to diversify its income streams and become a leader in digital banking. As part of this strategy, the bank announced plans in January to cut approximately 1,600 jobs across its branch network and create 830 new roles in a “relationship growth” team.
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