Lloyds Bank to Lay Off Employees at Its Risk Management Division
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Lloyds Bank, a UK high street bank, is trimming the size of its risk management division. The bank says that this division is preventing the strategic transformation of the bank.
According to the Financial Times, a memo sent last month to the staff at the bank outlined plans to trim this department. The memo mentioned that a majority of the executives at the bank believed that this department was blocking the progress of the bank’s strategic transformation journey.
Lloyds Bank Reduces the Risk of Its Risk Management Department
The memo stated that people were growing frustrated with time-consuming processes. It noted that some processes at the bank were affecting its ability to remain competitive, leaving it lagging behind other banks.
“We know people are frustrated by time-consuming processes and ingrained ways of working that impede our ability to be competitive and leave us lagging behind our peers,” the memo from the bank said.
The memo says that a majority of executives at the bank believe that the risk management division needs to be downsized to help the bank become more competitive. However, only a small section of the workforce believes in intelligent risk-taking.
While speaking to the Financial Times, Lloyd’s Bank said that the reorganization of this department will trim 45 roles, with new roles set to be created. The bank also says that it will upskill parts of its business.
The Financial Times revealed that 175 permanent roles could be trimmed according to sources close to the bank. 150 of these roles are in the risk division. The bank also plans to have 130 new jobs dealing in specialized risk and technical expertise.
The Dilemma of Risk Management Divisions
Risk management has often been a controversial department in many institutions. Risk management is often associated with reduced innovation and profits for companies. Risk managers are often accused of derailing a company’s plan to achieve more profits and become more competitive.
During the 2008 financial banks, banks made massive investments in the sub-prime lending space amid warnings from risk managers. Banks ignored the advice of risk managers, which then led to the crisis.
The risk management sector has been working on avoiding similar risks and promoting sound risk management models. Risk management models argue that companies can still generate revenue by being knowledgeable about risks and adopting accurate models.
The BTU trade union has criticized the decision of the bank to lay off employees at this division. The bank is currently facing regulatory scrutiny over its car loan models. The bank has also set aside £450 million in case of fines.
