Close Brothers, a banking group, has announced its intention to cut approximately 600 jobs in the United Kingdom and Ireland. These job reductions are part of the company’s latest financial report and are scheduled to occur over the next 18 months, affecting nearly one-fourth of its workforce of 2,600 employees.
The decision to downsize comes in the wake of ongoing losses for Close Brothers due to the motor finance scandal. The company is preparing for an industry-wide compensation initiative to address this issue by the end of the month, with a provision of £300 million set aside for driver compensation.
In its recent financial results, Close Brothers reported a loss of £65.5 million in the first half of the year, an improvement from the £102.2 million loss in the previous year. Additionally, the banking group unveiled plans to cut annual costs by approximately £85 million, with £25 million targeted for the current fiscal year ending in September and an additional £60 million reduction planned for the following financial year, a year ahead of schedule.
To achieve cost savings, Close Brothers is implementing strategies such as leveraging artificial intelligence (AI), as well as outsourcing and offshoring certain operations. Chief executive Mike Morgan emphasized the necessity of these actions to lower the company’s cost base structurally while enhancing its ability to serve customers efficiently.
Morgan stated, “The steps we are taking are regrettable for impacted employees, but they are essential to enhance our operational efficiency and better meet customer needs in a timely and reliable manner. These measures mark a crucial stage in reshaping our operational model for future scalability, enabling us to drive operational efficiency and realize additional savings in the years ahead.”
Looking ahead, Morgan highlighted the company’s resilient trading performance in the first half of the financial year, attributing it to cost management, strong credit performance, and a robust net interest margin. Close Brothers has refocused its business on areas with promising growth prospects, resulting in a slight reduction in the loan book in the first half, while core business segments continue to expand. The company aims to capitalize on future growth opportunities as a specialized banking entity.