Lloyds diverts 1,000 staff to help customers in debt as economic crisis deepens
- It expects to see an increase in the number of people falling behind on debts
- Staff encouraged to transfer to the bank’s Customer Financial Assistance team
Lloyds is redeploying 1,000 branch staff to help customers who risk spiralling into debt as the economic crisis deepens.
The bank expects to see an increase in the number of people falling behind on debt repayments when the Government’s support schemes unwind.
Staff are being encouraged to transfer to the bank’s Customer Financial Assistance team for periods of up to 18 months.
Lloyds expects to see an increase in the number of people falling behind on debt repayments
Employees are expected to start training for their new roles towards the end of August.
The move comes as banks battle against a spike of loan defaults and missed payments. Analysts have predicted that Lloyds, NatWest and Barclays will set aside an extra £3.9billion next week to deal with loans that go bad.
Bank revenues have also been hit due to a dramatic fall in consumer spending and record low interest rates.
Credit card income plunged after customers paid down a record amount of debt while largely confined to their homes during lockdown. Meanwhile, the Bank of England cut the base rate to 0.1 per cent in March.
Lloyds and NatWest’s profits are set to be almost wiped out by the crisis and they may even make a loss. Analysts have tipped Lloyds’ half-year profits to tumble from £2.9billion to just £42million for the period ending June 30. NatWest’s profits are expected to crash to £262million from £2.7billion.
Barclays has been relatively insulated from the turmoil in consumer banking by the success of its investment bank.
Barclays has been relatively insulated from the turmoil in consumer banking by the success of its investment bank.
Its bankers have made bumper fees from the surge in trading on the stock market during the global economic meltdown. The investment bank’s profits are tipped to rise 16.4 per cent to £2billion.
However, Barclays’ cards business has taken a hit as consumers cleared balances. Analysts think the unit will swing to a loss of £539million from a £627million profit in 2019.
JP Morgan analysts warned that banks would try to boost revenues later in the year by slashing savings rates even further.
They said: ‘With Government support measures easing from the third quarter, we believe that uncertainty over 2020 impairments will persist until the impact of the reversal of the furlough scheme and other stimulus is clearer, with no expectations of dividends before 2021 and low payout thereafter.’
A Lloyds spokesman said: ‘In the months ahead we know that many of our customers will be grappling with their finances following the impacts of Covid-19.
‘We want to make sure our colleagues are there when our customers need us.’