Lloyds Banking Group (NYSE: LYG ) CEO Antonio Horta-Osorio’s actions usually don’t go unnoticed. In an effort to make Lloyds “leaner, more agile and more responsive,” Horta-Osorio now has decided to shed some 15,000 jobs. The British mortgage lending giant’s chief is focusing on cutting costs -- an approach which made him famous at Banco Santander (NYSE: STD ) .
At the moment, Lloyds has quite a few challenges staring it in the face. The fact that it reported a huge loss of $3.9 billion in its latest quarter shows that it is clearly still struggling on the earnings front. It was also being pressed by regulators to divest quite a bit.
Fiscal austerity has been plaguing European banks for several years now. To cope with all this, Lloyds is cleaning house and focusing on nearby markets. The bank aims to reduce costs by $2.4 billion, and to achieve this, it has decided to shutter overseas branches and resort to mass layoffs. Not surprisingly, this is not a new or particularly brilliant strategy for Osorio. Selling off Lloyds’ branches was the first step Horta-Osorio took after taking over as its chief.
Mass culling across the industry
Lloyds appears to be following a general trend in the banking industry. Bogged down by huge debt and weak earnings, many European banks are being compelled to slash head counts.
HSBC (NYSE: HBC ) is preparing to pare about 700 jobs in its U.K. retail bank arm. Barclays (NYSE: BCS ) and Credit Suisse (NYSE: CS ) are following a similar strategy to deal with declining revenues from securities and fixed-income. Credit Suisse intends to slash more than 600 positions in its investment bank. In fact, the trend is not just restricted to Europe. Goldman Sachs (NYSE: GS ) also plans to cut some 230 jobs by the end of the year. Clearly, while recovery does feel like it’s just over the horizon, banks still feel like they can trim more fat based on weak demand for their services.
The Foolish bottom line
Lloyds’ management is trying to trim expenses so that it can focus on core operations. This should be a stepping stone in Lloyds’ path of recovery or, as Horta-Osorio puts it, becoming a “great bank.”