Lloyds Banking Group will close all its 164 Cheltenham & Gloucester (C&G) branches and shut other parts of its mortgage business, with the loss of 1,660 jobs.

Under the review of Lloyds’ sprawling empire, Intelligent Finance, the bank’s internet and phone business, will stop offering new mortgages and Bank of Scotland will no longer sell home loans through intermediaries.

Lloyds, which bought HBOS in a rescue takeover last year, has shed 3,000 jobs since the controversial deal that created the UK’s largest retail bank. Analysts have speculated that the bank may cut about 40,000 of its 140,000 workforce and close many of its 3,000 branches.

John McFall, the chairman of the Treasury Select Committee, criticised Lloyds yesterday over the fact that C&G staff learnt of the latest job cuts through media reports. In a letter to Eric Daniels, the Lloyds chief executive, he wrote: “Those at risk of losing their jobs should be treated with the utmost courtesy. I was, therefore, extremely disappointed to note that Lloyds staff appear to have found out from the media, rather than their managers, that their particular jobs were at risk.”

Lloyds is also expected either to sell or to close down a significant number of the plethora of brands that were brought under one roof through the merger with HBOS.

Ray Boulger, a mortgage expert at John Charcol, the brokerage, said: “It is inevitable that some brands will disappear.”

Lloyds operates under a variety of names in the home loans market, including Halifax, Bank of Scotland, Intelligent Finance, Lloyds and Scottish Widows Bank. Mr Boulger said that in the buy-to-let market alone, Lloyds had three brands: Bank of Scotland, C&G and BM Solutions.

The bank controls 30 per cent of the mortgage market. However, Lloyds may come under pressure to shrink from a future government. The fewer its brands, Mr Boulger said, the more difficult it will be for politicians to enforce a reduction in Lloyds’ grip on the market. The bank has already said that it will phase out Clerical Medical, its pensions and investment brand.

Unions condemned the fresh loss of jobs and branch closures at Lloyds. Derek Simpson, joint leader of Unite, said: “News that Lloyds is to close Cheltenham & Gloucester branches, resulting in hundreds of job cuts, is nothing short of disgraceful. It will rip the heart out of hundreds of local communities up and down the country.”

Lloyds said that although the C&G branches will close in November but that C&G mortgages will be sold through intermediaries, by post and over the telephone.

The loss of C&G from the high street comes two weeks after Santander, of Spain, said that it would replace its Abbey, Alliance & Leicester and Bradford & Bingley brands with its global red and white logo from 2010.

Separately, Lloyds is reported to be in talks to sell part of the fund management division it inherited through its merger with HBOS. Abdallah Nauphal, the former chief executive of Insight Investment Management, is leading a team to aquire Insight’s third-party business for up to £300 million, according to the Financial Times.

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