banking

U.K. banks forced to deepen job cuts

Posted 3/19/12

LONDON - Britain’s banks will need to cut expenses further and eliminate more jobs to improve profitability and tackle the additional cost of regulation, KPMG LLP said.

Banks may also need to raise prices for consumer-banking customers and reduce compensation for employees as they are forced to hold more capital, the accounting firm said in a report published today.

“It was a tougher year than many expected, and banks will need to continue working hard to turn things around,” said Bill Michael, U.K. head of financial services at KPMG, in the statement. “We will see continued cost costing, which inevitably means further job losses.”

U.K. banks, including Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc and Barclays Plc, are reviewing their operations and trimming profitability targets as regulators enforce higher capital requirements to prevent a repeat of the 2008 financial crisis. Lenders also face “intense pressure” on margins amid competition for deposits and low interest rates, KPMG said.

Lloyds said on March 13 it would cut 1,600 jobs as part of CEO Antonio Horta-Osorio’s plan to eliminate 15,000 roles. About 5,400 positions have gone so far. HSBC Holdings Plc said in February it has cut about 11,000 posts out of a planned 30,000-job reduction.

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