Lloyds Banking Group disclosed plans to shed another 5,000 jobs yesterday, taking the total to about 12,500 since the bank was created by the takeover of HBOS by Lloyds TSB in January.

The bank, which is 43 per cent-owned by the taxpayer after receiving £17 billion of direct bailout cash, said that the latest cuts would come in administration, insurance and mortgage processing. Natural turnover and redeployment of staff would minimise the need for compulsory redundancies and some cuts would be targeted at temporary staff and contract workers.

The net effect of the programme announced yesterday would be to shed 2,600 permanent UK jobs by the end of next year. Lloyds would not say where the cuts would fall, but Accord, the bank union, estimated that West Yorkshire, Belfast and Leicester would be among the areas hit worst, losing about 500, 300 and 200 jobs respectively.

The cuts are another blow for Britain’s financial sector and the country’s workforce as a whole. Figures due out tomorrow are expected to show that Britain’s jobless total has risen to 2.5 million, taking the unemployment rate to 8 per cent. Last week, RBS said that it would cut 3,700 posts on top of the 16,000 it had already shed, while HSBC outlined plans to lose 1,700 positions across the country, taking its cuts to 3,400 since December.

Lloyds said that it was committed to working through the job cuts with staff sensitively and carefully and to keeping them fully informed. The bank is targeting synergies of at least £1.5 billion from the merger and believes that by the year-end it will have achieved annualised cost savings of £750 million.

Ken Penton, a spokesman for Accord, warned that more job losses were likely, pointing out that Lloyds had yet to address possible cuts in its wholesale division and retail branch network. He criticised the way in which Lloyds had handled the announcement: “If it was designed to end the uncertainty, it has probably had the opposite effect,” he said.

Unite, another union with Lloyds members, said that the cuts demonstrated “the depth of corporate arrogance within this taxpayer-supported bank. This country’s financial sector should be looking towards the future, rather than continuing to slash jobs without proper consideration of how to rebuild the public’s confidence in our tarnished banking sector.”

Lloyds, which unveiled plans last week to raise £21 billion, including an additional £13.5 billion from taxpayers, said that 2,820 jobs in its back office operations would be affected, with a net 1,350 jobs going. In the insurance businesses, which include Scottish Widows and Clerical Medical, 1,190 roles will be hit, with a net reduction of 940 jobs. In the mortgage operations, 950 roles will be affected and, after relocations, 270 jobs will be lost.

The lender has already cut 7,500 jobs since the takeover deal was completed in January. About 1,600 further jobs were reprieved after Lloyds decided not to close its Cheltenham & Gloucester brand, instead planning to sell it to meet European competition concerns.

Staff formerly with HBOS will receive redundancy pay of a minimum of one month’s pay for each year of service up to a maximum of two years’ pay.

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