Lloyds plans could put 3,000 staff at risk

Lloyds Banking Group is preparing a sweeping performance management reset that could place roughly 3,000 employees at risk of dismissal, after ranking the bottom 5 percent of its 63,000‑strong workforce for targeted improvement, according to reports on Thursday.

The move, centred in London and across UK operations, forms part of chief executive Charlie Nunn’s push to sharpen productivity and diversify income.

Managers have been instructed to start structured support programmes for lower‑ranked staff, akin to performance improvement plans, with outcomes ranging from improvement to exit, the Financial Times reported. Reuters noted it had not independently verified the details, underscoring that the bank has yet to publish an RNS or formal announcement on the policy. The approach resembles so‑called rank‑and‑yank models used historically in US corporates, though UK employment law and union engagement typically impose stronger procedural safeguards.

Lloyds has already run successive cost and structure reviews under a multi‑year digital investment plan. Previous rounds concentrated on middle management and selected office closures while creating new roles in growth areas. Thursday’s reporting suggests the bank now aims to drive a more persistent high‑performance culture through continuous evaluation, a notable shift for a UK lender that has traditionally emphasised incremental change over abrupt workforce churn.

The timing lands as markets scrutinise banks’ cost bases and revenue mix amid higher funding costs and an uncertain rate path. UK long‑dated yields have surged this week before easing, a dynamic that affects banks’ capital and asset‑liability management as well as investor risk appetite for domestically exposed lenders. Analysts said investors would seek clarity on the implementation, appeals process and any financial targets tied to the overhaul at the next results update.

Trade unions have previously challenged changes to representation for senior staff at Lloyds, arguing that forum‑based consultation cannot replace collective bargaining. Any rise in performance‑related exits is likely to draw close scrutiny from Unidos and Accord, given the potential for disputes around grading consistency and equalities considerations in a low‑growth environment.