Close Brothers to Cut 600 Jobs and Accelerate AI Deployment Amid Motor Finance Scandal Fallout
Key Takeaways
- ▸Close Brothers is eliminating 23% of its workforce (600 jobs) over 18 months as part of a major cost-reduction strategy
- ▸The bank plans to accelerate AI and automation deployment 'at pace' to reduce operational costs and improve customer experience
- ▸Additional £135 million provision for car finance compensation brings total expected costs to £300 million, though short sellers claim this could be significantly higher
Summary
Close Brothers banking group announced plans to eliminate approximately 600 jobs—nearly a quarter of its 2,600-strong workforce—over the next 18 months while simultaneously accelerating artificial intelligence deployment across operations. The restructuring comes as the specialist lender reported pre-tax operating losses of £65.5 million for the first half of the year and set aside an additional £135 million for compensation related to its motor finance mis-selling scandal, bringing total provisions to approximately £300 million. The bank aims to reduce costs by £25 million in the current financial year and £60 million in the next, achieving savings through outsourcing, offshoring, property reduction, and increased automation. CEO Mike Morgan stated the moves were "necessary to structurally lower our cost base while increasing our agility and ability to serve our customers," though the announcement sparked significant investor concern, with shares falling 19 percent after short seller Viceroy Research claimed the lender would need to double its £300 million provision.
- Cost reduction targets increased to £25 million this year and £60 million next year through outsourcing, offshoring, and property footprint reduction
Editorial Opinion
Close Brothers' announcement reflects a growing trend among financial institutions using AI-driven automation as a dual-purpose tool: addressing structural cost pressures while managing workforce transitions. However, the timing raises questions about whether aggressive AI deployment is primarily a strategic modernization move or a cost-cutting response to regulatory penalties and shareholder pressure from the motor finance scandal.
