Lloyds Bank Overhauls Risk Management Amid Strategic Transformation

Lloyds Banking Group is set to slash jobs within its risk management division, following an internal review that identified the function as a potential impediment to the bank's strategic transformation.

The restructuring initiative, disclosed in a memo penned by Lloyds' chief risk officer Stephen Shelley, underscores the bank's resolve to recalibrate its approach to risk and controls. Shelley highlighted that a staggering two-thirds of executives perceived risk management as a hindrance to progress, while less than half of the workforce felt encouraged to engage in intelligent risk-taking.

"The initial focus is on non-financial risks," Shelley affirmed in the memo, obtained by the Financial Times. The envisioned overhaul aims to furnish Lloyds with a new operational model, facilitating agility and clarity in roles and responsibilities, thereby enabling the bank to expedite its pace of transformation.

However, the decision has stirred concerns within certain quarters. Mark Brown, general secretary of the independent BTU union, cautioned against the potential ramifications of loosening Lloyds' risk controls, particularly in light of the ongoing industry-wide scrutiny over the possible mis-selling of car finance. Brown voiced apprehension, suggesting that such measures could spell catastrophic consequences for the bank's future.

Lloyds, cognizant of the challenges posed by the restructuring, acknowledged the necessity of balancing organizational adjustments with talent retention. The bank emphasized its commitment to creating new roles and upskilling existing colleagues, albeit acknowledging the inevitability of parting ways with some personnel who had contributed to the group's past success.

According to sources familiar with the matter, approximately 175 permanent roles are at risk due to the restructuring, with the lion's share—150 positions—coming from the risk division. However, Lloyds also intends to offset these reductions by creating 130 new roles, with a specialized focus on risk and technical expertise.

"We know people are frustrated by time-consuming processes and ingrained ways of working that impede our ability to be competitive and leave us lagging behind our peers," the memo underscored, reflecting the bank's acknowledgment of the need for change.

This initiative unfolds against the backdrop of Lloyds' ambitious £4 billion investment plan aimed at diversifying its revenue streams away from mortgages towards less interest rate-dependent income streams, such as wealth management and insurance. As the bank progresses through this transformational journey, it has scrutinized thousands of middle-management positions to sharpen its focus on digital services—an evolution imperative for staying competitive in today's financial landscape.

With approximately 60,000 staff on its roster, Lloyds remains committed to navigating these changes thoughtfully, cognizant of both the challenges and opportunities they present as it charts a course toward a more agile and resilient future.

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