Close Brothers, the UK specialist lender, has announced plans to cut approximately 600 jobs, nearly a quarter of its workforce, as part of a cost-saving initiative. The cuts will be implemented over the next 18 months across its operations in the UK and Ireland, with the aim of reducing costs by £25 million in the current financial year and an additional £60 million in the next, a year earlier than previously planned.
The job reductions will be achieved through outsourcing, offshoring, and reducing office space. The bank also stated it is accelerating the deployment of automation and artificial intelligence to further cut costs and enhance customer experience. Chief executive Mike Morgan described the impact on affected colleagues as regrettable but necessary to structurally lower the cost base and improve agility.
The announcement came as Close Brothers reported a pre-tax operating loss of £65.5 million for the six months to 31 March, after setting aside an additional £135 million for the motor finance mis-selling scandal. This brings the total provision to around £300 million. The Financial Conduct Authority (FCA) is expected to finalise its compensation scheme for affected drivers by the end of this month, facing pushback from lenders over the calculation of consumer losses.
Close Brothers' shares fell sharply after short seller Viceroy Research claimed the lender would need to at least double its provision for car finance to between £572 million and £1.07 billion. The bank strongly disagreed with the report, but analysts noted that market scepticism remains high due to uncertainty over compensation costs. Despite the cost-saving measures, the core business is seen as insufficiently strong to attract investors amid the ongoing motor finance issue.
