State-backed Lloyds Banking Group is reportedly expected to announce thousands of job cuts as it publishes latest financial results with a strategic update tomorrow.
Reports suggest the lender is preparing to shed up to 9,000 staff - about a tenth of the workforce - over the next three years as part of a digitisation strategy that will lead to more branch closures.
The strategy is expected to see a shift towards more computerised working with the aim of reducing costs and improving service. Jobs in areas such as mortgage processing and new account processing look likely to be under threat.
Lloyds Banking Group, which is 25% owned by the taxpayer and includes Halifax and Bank of Scotland, employs about 88,000 people.
It has shed more than 30,000 jobs since the financial crisis - when the Government poured in £20 billion to rescue it - and staff were faced with fresh uncertainty when reports began to emerge weeks ago that it was once again set to wield the axe.
The bank has not commented on the reports.
Meanwhile, third quarter financial results are expected to show more progress on the trading front as economic conditions improve, while investors will be looking ahead to the prospect of a resumption in dividend payments after more than six years.
Earlier this year, Lloyds reported underlying profits up 32% to £3.8 billion for the first half, though its overall bottom-line profit fell because of a £1.1 billion hit from continuing “legacy issues”, including the mis-selling of payment protection insurance.
Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers, said: “Exposure to both the improving UK and Irish economies should again see the bank reporting reduced bad debt impairments.”
Analysts are focused on any sign that Lloyds will make a dividend payment with its full-year results in February but any announcement confirming this is likely to be delayed until after the results of bank industry stress tests on December 16.
Results of a separate examination by European regulators over the weekend gave traders the jitters as Lloyds, while passing the test together with UK counterparts, fell closest towards a 5.5% capital buffer threshold when faced with a financial crisis scenario.
The Bank of England is planning to announce the results of its own stress test of UK banks on December 16, when there will be a number of significant methodological differences.
The European exercise - which was failed by 24 European lenders - used banks’ balance sheets at the end of 2013 to analyse how they might cope in the event of such a crisis.
It suggested Lloyds would see its capital buffer reduced to 6.2% under such a scenario, compared to 6.7% for fellow state-backed bank Royal Bank of Scotland, rising to 7.1% for Barclays and 9.3% for HSBC.
Shares in Lloyds fell 2%. Analysts at Jefferies downgraded the stock saying the group would now need to operate with a higher capital ratio, jeopardising the likelihood which they now said would not be expected until 2016.
Gary Greenwood of Shore Capital said anxiety over the progress of the recovery, especially the cooling of the housing market, together with a competition probe into the sector, created added uncertainty.
“It is fair to say that our enthusiasm for the stock is beginning to waver,” he added.