City banks plan 4,000 job cuts as lending margins narrow
Falling interest rates were meant to lift the economy. For the banks, they have squeezed the spread between what they pay savers and charge borrowers
Britain's biggest banks are preparing to cut about 4,000 jobs over the coming year as the margin between what they pay depositors and charge borrowers narrows to its thinnest since the pandemic.
Two lenders have told staff of hiring freezes, and a third is understood to be considering the closure of up to 120 branches, according to people familiar with the plans.
The squeeze follows the rate cuts that markets cheered last year. Deposit costs have fallen more slowly than lending rates, partly because savers have become quicker to move their money to whichever bank pays most.
“The British saver used to be loyal to the point of indifference,” said one banking analyst. “That is over. The comparison apps did what thirty years of competition could not.”
Bank shares have trailed the FTSE 100 by nine percentage points this year.
