Lloyds to cut 7,000 vendors in savings drive

30 June 2011

30 June 2011 | Adam Leach

Lloyds Banking Group is to reduce its supply base from 17,000 to 10,000 to save £1.5 billion a year by the end of 2014.

Published today, the bank’s Outcome of strategicreview - drawn up after new chief executive António Horta-Osório’s first 100 days in charge - outlines the group’s future plans which includes reducing third-party spend by 15 per cent.

The review said the bank would change the way it operates to focus on strengthening supplier relationships, simplifying processes and optimising demand management.

A spokeswoman for the company told SM reducing supplier numbers would be a gradual process. She said: “The procurement team will be working through it over the next three years”. She added the process was driven by a desire to get competitive market prices.

The strategy will also see the group reduce staff numbers by 15,000, partly by centralising its “control functions” – operations and IT, finance, risk management, HR and legal. The strategy said the cuts will come through a reduction in back-office functions and middle management.

Horta-Osório said in a statement: “We will unlock the potential in this franchise over time by creating a simpler, more agile and responsive organisation, and by making substantial investments in better-value products and services for our customers.”

The report also said the group’s integration programme to combine the functions of Lloyds and HBOS is on track to be completed by the end of this year and would generate annual savings of £2 billion.

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