Lloyds Banking Group (LBG) plans to axe 5,000 jobs by December 2010 to reduce overlap caused by the Lloyds-HBOS merger.

The majority of the cull will take place in the bank’s operations unit, which includes IT, collections and payment services, with a total of 2,600 UK permanent employees being shown the door.

According to LBG, some 2,820 roles will be affected across the operations division, this will include 720 redeployed roles. The bank expects to achieve an additional reduction of 750 roles – including approximately 550 offshore positions – by getting rid of contractors and temporary staff.

“Today marks another important step towards bringing our businesses together. We will continue to work closely with those colleagues affected by today's announcement to help them through these changes over the coming year,” said group integration director at LBG, Mark Fisher.

“We have mitigated the impact on positions through redeployment and the release of contractors and temporary staff."

Following the changes, a net reduction of 1,350 jobs is expected across the unit. Workers unions have been notified and Unite, which represents the technology workers, labelled the move as a demonstration of “corporate arrogance”.

“The UK's financial sector should be looking towards the future, rather than continuing to slash jobs without thinking about how to rebuild the public’s confidence in our tarnished banking sector,” said Unite national officer Rob MacGregor.

“Unite is calling for the immediate suspension of all job losses and is looking for an agreement of no compulsory redundancies in any section of LBG,” said MacGregor.

The announcement comes days after the Royal Bank of Scotland and HSBC announced job cuts that will potentially affect over 5,000 jobs in the UK.