LONDON (AFP) – Britain's bailed-out Lloyds Banking Group axed 15,000 jobs Thursday as it bids to halve its international division, save £1.5 billion a year and return to full health after the global financial crisis.
LBG announced that it would cut 14 percent of its staff following a strategic review, saving the equivalent of 1.7 billion euros or $2.4 billion by 2014 as new chief executive Antonio Horta-Osorio seeks to transform the loss-making lender.
The company's share price closed up almost ten percent as investors applauded the review, which is aimed at returning the group to profitability to enable the British government to sell its 41-percent stake.
In a bad day for staff at British banks, HSBC announced it was cutting 700 jobs.
The announcement by LBG means it has now slashed more than 40,000 posts since 2009 as it looks to nurse its way back to health after a part-nationalisation at the height of the global financial crisis,
"We have three compelling reasons for change: we must return to profitability as quickly as possible, we must support the UK economy and we must pay taxpayers' money back," Portuguese national Horta-Osorio, 47, told reporters.
Under the new strategy, LBG will also make major investments in its Lloyds TSB, Halifax and Bank of Scotland divisions, as well as in its Scottish Widows insurance business.
The lender, which was sunk by the ill-fated 2008 takeover of rival bank HBOS, will seek to cut its international activities to 15 nations by 2014, compared with the current level of 30.
An LBG spokeswoman declined to comment on which countries the group would exit but it is known that the majority of job losses would be in middle management and back-office roles, such as IT and support functions.
LBG stressed it would seek to shed staff through natural departures and redeployment rather than redundancy.
"It's important to note that these (cuts) are roles, not people. We have a strong record of minimising redundancies," said Horta-Osorio.
He added: "We have to do this. This bank has lost money, it's losing money this year on an after-tax basis. We have to get this bank back on to its feet."
LBG suffered spectacular losses in 2008 and 2009, as bad debts rocketed in the wake of its 2008 takeover of HBOS, which was plagued by toxic or high-risk property investments.
The lender bounced back into profit in 2010 after slashing bad debts, but lurched back into losses in the first quarter of 2011.
"Our aim is to become the best bank for customers," added Horta-Osorio, the former head of Santander UK who was parachuted into LBG in March.
However, Thursday's news of more steep job cuts, announced amid a 24-hour walk-out by public sector workers in Britain, sparked intense anger from trade union Unite.
"The long-awaited results of the Lloyds strategic review will cause deep distress and anxiety across the company as staff face the reality of this arbitrary slashing of jobs," said senior Unite official David Fleming.
"The conclusion of this review to make 15,000 staff cuts is yet another extreme example of the financial services industry cutting vital staff in a desperate attempt to create a mirage of acceptability following the financial crisis."
Horta-Osorio's predecessor Eric Daniels left Lloyds amid intense shareholder anger after he oversaw the government-brokered takeover of HBOS.
On Thursday, the share price of LBG rocketed 9.73 percent to close at 49 pence, topping the benchmark FTSE 100 index.
DETROIT (Reuters) – New-car retail sales in the U.S. market cooled in the third week of June from the stronger pace of the first two weeks, a top industry consulting firm said on Thursday.
The June retail sales rate, adjusted for an annual figure, is expected to come in below 9.8 million vehicles sold, but still nearly 500,000 vehicles better than May, according to J.D. Power and Associates, which tracks real-time transaction sales data from more than 8,900 U.S. auto dealers.
The forecast for June would be an improvement from May's annual rate of 9.32 million vehicles but trailing the rest of the year, when results ranged from 10.15 million in January to 11.15 million in February.
The total light-vehicle selling rate, which also includes fleet sales, is expected to be below 12 million vehicles for the second straight month, J.D. Power said. Automakers are scheduled to report June U.S. sales on Friday.
"Sales in June typically face pressure from being between two strong selling holidays -- Memorial Day and Independence Day -- but incentive levels $500 below the first-quarter average and depleted vehicle inventory have added to the pressure as the month progressed," Jeff Schuster, executive director of global forecasting at J.D. Power, said in a statement.
"However, the fundamentals remain in place for a marked return to the recovery pace set in the first four months of the year," he added.
Fewer cars on dealer lots and higher prices -- factors that led to disappointing U.S. auto sales in May -- look to hold June results in check, analysts and economists said.
U.S. auto sales are expected to rise only 2 percent from May -- but a healthier 8 percent on a year-over-year basis -- a month after tighter inventory caused by Japan's earthquake and a spike in vehicle prices led more consumers than expected to hold off on buying cars and augmented fears of a slowing U.S. economy.
The average forecast of 41 economists surveyed by Reuters was for an annual sales rate in June of 12 million vehicles, up from 11.1 million last year, and 11.8 million in May.
(Reporting by Ben Klayman in Detroit, editing by Matthew Lewis)
ALEXANDRIA, Virginia (Reuters) – Taylor, Bean and Whitaker Mortgage Corp's former chairman, convicted of masterminding a $2.9 billion fraud scheme before the company collapsed, was sentenced on Thursday to 30 years in prison.
Lee Farkas, 58, was convicted in April on 14 counts of conspiracy, bank, securities and wire fraud that brought down his firm in 2009 as well as contributed to the implosion of one of the top U.S. banks, Colonial BancGroup Inc's Colonial Bank.
He was the last to be sentenced in the fraud case, which represents a victory for the Obama administration because it has been criticized for prosecuting few senior executives over the housing market collapse and subsequent financial crisis.
Before being sentenced, Farkas read a brief statement in which he said he "strived to be a good person" and that he believed the employees of the mortgage firm and the bank were "acting together in good faith" rather than greed.
While he said he was remorseful, Judge Leonie Brinkema said that she did not detect any remorse in his statement -- rather "you regret getting caught." She imposed the 30-year sentence and also ordered him to forfeit more than $38.5 million.
"This was a very serious series of crimes," Brinkema said.
Prosecutors had sought at least 50 years in prison so that Farkas would be sure to spend the rest of his life there and asked the judge to require Farkas to forfeit some $42 million. Farkas' lawyer had requested a sentence of no more than 15 years.
"We think he deserves to be punished severely," said Patrick Stokes, one of the lead prosecutors. "The losses from this case are off the charts."
Farkas was accused of running an evolving scheme between 2002 and 2009 to cover up mounting losses at Taylor, Bean, including transferring funds between accounts at Colonial Bank and also selling mortgage loans that either did not exist, were worthless or had already been sold.
He and other executives at the mortgage company were also accused of misappropriating money from one of its own funding mechanisms which had two big investors, Deutsche Bank AG and BNP Paribas SA.
He also attempted to help Colonial Bank obtain a $553 million loan from the federal bank bailout program, but the money was never disbursed. The bank was shut down by regulators and most of its assets were sold to BB&T Corp.
Colonial Bank's collapse was the sixth largest bank failure and also the third largest during the financial crisis which began in 2007.
(Reporting by Jeremy Pelofsky, editing by Lisa Von Ahn and Gerald E. McCormick)