THE new Lloyds Banking Group said today that it has already identified £100 million of cost savings since it acquired HBOS.
The company said it has made the savings from ceasing projects that will no longer be required in the enlarged group.
The integration update came as it confirmed today that HBOS made a £10.8 billion pre-tax loss last year, while Lloyds profits wer
e down 80 per cent at £807 million.
It said it expects to be loss-making this year following the takeover of Edinburgh-based HBOS.
HBOS's £10.8bn loss for 2008 is the fourth-largest losses ever recorded for a UK company.
The news came a day after Royal Bank of Scotland posted a £24.1bn loss – the biggest loss of all time.
The combined group's 145,000 staff are now bracing themselves for large-scale job losses.
Lloyds said that it hoped the initial £100m of savings could be achieved through natural turnover or voluntary redundancy.
And it still plans to make £1.5 bn of savings in 2011. The figure represents 14 per cent of the group's cost base and it is expected that it will result in at least 20,000 job losses. Today's figures from HBOS showed a five-fold rise in bad debts at the bank during 2008, up to £9.9bn from £2bn in 2007.
The bulk came from HBOS's corporate lending arm, which saw impairment charges of £6.6bn after the bank's new owner took a more conservative view of its lending book. Bad debts as a proportion of its loans jumped to 11.9 per cent.
Lloyds chairman Sir Victor Blank said: "We know the short-term outlook for the enlarged group is challenging. Whenever economic conditions do begin to normalise, however, we believe we will be in a very strong position to reap the benefits.
"Our strong franchise across the whole range of product lines will enable us to do just that. In the meantime, our imperative is to manage the business as effectively as possible during these challenging times, and we have the team to do this."
The integration of Lloyds and HBOS is to see The Mound become the Scottish headquarters of the new group, while Bank of Scotland will be retained as the main retail brand in Scotland, gradually replacing Lloyds TSB Scotland.
Job losses are seen as inevitable, with Edinburgh expected to be hit hard. The HBOS companies employ around 6500 staff in the city, while Scottish Widows has 3667 and Lloyds TSB Scotland has 2300.
Derek Simpson, joint leader of trade union Unite, said: "Now is not the time to reduce what is clearly the bank's greatest asset – its staff. As the taxpayer looks to insure the assets of this and other financial organisations it is vital that jobs are retained."
Lloyds also said talks with the UK government on an asset insurance scheme "are well advanced".
The full article contains 498 words and appears in Edinburgh Evening News newspaper.
