Lloyds Banking Shake-Up: 5% Staff Face Job Axe 2025

Did you know Banking jobs in the UK have always been considered safe, but now this status is being questioned. Lloyds Banking Group, one of the country’s most prestigious high street lenders, has announced a new performance management policy that could put thousands of jobs at risk.The change comes at a time when traditional banks are under pressure from digital challenges, rising operating costs and economic uncertainty.

For many, the move raises concerns about whether the new policy is a genuine attempt to increase efficiency or just a strategy to quietly reduce staff numbers.The world of high street banking is about to undergo a big shift, as Lloyds Banking Group pushes forward with a tough new performance management policy. Around 5% of its 63,000 staff could be placed under strict performance reviews, with some ultimately at risk of redundancy if improvements aren’t made.

This move, championed by Lloyds CEO Charlie Nunn, marks a clear attempt to bring the hard-edged culture of investment banking and hedge funds into the more traditional setting of retail banking.

What the New Policy Means for Staff

Lloyds managers have been instructed to rank employee performance across the entire organisation — from frontline branch staff to senior directors. Those who fall into the bottom 5% will be placed on “special performance plans.” If no progress is seen, dismissal could follow.

The bank says this is all part of a wider strategy to “embed a high-performance culture”, ensuring that every team member contributes to its long-term growth.

But with roughly 3,000 employees potentially impacted and around 1,500 facing the axe, many workers are worried about being unfairly pushed out.

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Union Concerns: “Staff Will Be Hounded Out”

Unions have been quick to voice concern.The BTU union, representing 17,000 Lloyds workers, warned that staff could end up being “hounded out of the business” under what they described as a numbers-driven policy.

Meanwhile, the Accord union, which represents more than 21,000 employees at Lloyds and TSB, urged the bank to stick to established performance management processes and provide reassurance to staff.

Why Lloyds Is Taking a Tougher Stance

Charlie Nunn, who has already cut 1,600 jobs last year and 3,000 the year before, has made it clear that he expects higher standards from staff. Under his leadership, Lloyds has also been closing branches while streamlining operations across brands like Halifax and Bank of Scotland.

The strategy has already paid off for investors — Lloyds’ share price has nearly doubled over the past five years. Now, Nunn is doubling down with a plan that echoes the infamous “rank and yank” approach once popularised by Jack Welch at General Electric: ranking staff by performance and removing the lowest performers.

The Bigger Picture: Cost Cuts and Offshoring

Analysts believe the tougher stance is also linked to Lloyds’ push to offshore more roles. The bank aims to hire 4,000 new employees in its India tech hub by the end of this year, cutting costs while boosting efficiency.

Industry experts suggest that if Lloyds can match peers like NatWest and Barclays in terms of offshoring and branch reductions, it could drive meaningful profit growth.

However, critics argue this approach risks damaging morale, worsening work-life balance, and fuelling staff stress at a time when job security in the financial sector is already fragile.

A Wider Debate on Workplace Culture

The changes at Lloyds highlight a bigger debate across British workplaces. For years, companies have faced pressure to embrace flexible working, wellness initiatives, and shorter working weeks. Yet, productivity in the UK has remained stubbornly flat, and the FTSE 100 has underperformed compared to global markets.

Lloyds’ new policy raises the question: is a “war on mediocrity” the right way forward — or will it erode trust and loyalty among staff?

What Happens Next

For now, performance reviews will be closely monitored using HR software, with managers expected to track staff progress carefully. While Lloyds insists the process is designed to help colleagues perform at their best, thousands of workers fear it’s a step toward mass job losses.

As the bank moves ahead with its growth strategy, one thing is clear: the culture at Lloyds is changing — and not everyone will be comfortable with the new rules of the game.

Frequently Asked Questions

Q1. Why is Lloyds changing its performance system now?

Lloyds is trying to remain competitive as digital banks and fintechs disrupt the market. Management believes stricter performance rules will help increase efficiency.

Q2. How many employees might be affected?

Around 3,000 employees may be directly impacted, with approximately 1,500 potentially facing redundancy.

Q3. What does a “special performance plan” mean?

It means employees in the bottom 5% will be closely monitored, given improvement goals, and could lose their jobs if they fail to meet targets.

Q4. How have unions responded to the policy?

The BTU union and others have criticized the move, calling it unfair and damaging to workplace culture. They argue it’s more about job cuts than performance.

Q5. Will customers feel the impact of this policy?

Yes. Demoralized staff may struggle to provide quality service, and customers could see changes in the way branches operate.