Virgin Money and TSB planning more job cuts
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Two prominent British high street lenders, Virgin Money and TSB, have raised concerns about potential job losses, with Virgin Money indicating that more roles may be cut following the recent shedding of 150 employees, while TSB plans to eliminate around 300 positions.
Virgin Money disclosed that it had reduced its workforce to slightly over 7,000 employees by closing 39 sites during the three months ending December, which trimmed its branch network to 91 locations. The bank warned that further redundancies were likely, with additional reductions in full-time equivalent staff anticipated throughout the year. Clifford Abrahams, the finance chief of the FTSE 250-listed bank, acknowledged the possibility of additional branch closures.
Similarly, TSB, which employed over 5,500 people last year, informed its staff of plans to cut approximately 300 jobs. This decision follows remarks from Cesar Gonzalez-Bueno, the CEO of Sabadell, the Spanish group that owns TSB, indicating that job losses would occur at the British bank as part of a restructuring process. While no specific figure was provided by Gonzalez-Bueno, TSB emphasized that such decisions are never made lightly.
The warning of potential job cuts from Virgin Money comes amidst growing expectations that the Bank of England will reduce interest rates this year, having raised them rapidly since late 2021 to tackle inflation. While higher borrowing costs benefited commercial lenders, they are now preparing for a potential reversal in this trend.
Speaking on this matter, Abrahams noted the pressure on income across the sector as interest rates decline, emphasizing the need for cost efficiency. Despite inflation remaining above 2 per cent, Virgin is focused on managing costs effectively.
In its first-quarter trading update, Virgin Money’s CEO, David Duffy, reported a positive start to the financial year. Although mortgage lending in the last quarter decreased by 2.2 per cent compared to the previous year, there were indications of improvement in January, with mortgage applications rising to 2019 levels. The recent decline in mortgage rates has bolstered affordability for homebuyers.
Virgin Money’s net interest margin remained steady quarter-on-quarter at 1.89 per cent, supported by hedging arrangements. The bank maintained its forecast for a full-year margin between 1.9 per cent and 1.95 per cent for 2024, with deposits increasing by 1.7 per cent year-on-year to £67.3 billion in the last quarter.
