Lloyds Banking Group will cut 5,000 jobs by the end of the year, principally affecting back office staff.

The cuts, which are the latest in a string of job announcements at the bank, will involve 2,820 operational staff, 1,190 insurance staff and 950 employees in the retail division.

They are part of last year’s merger between Lloyds TSB and HBOS, which created the Lloyds Banking Group. The group, now 43 percent owned by the taxpayer, is attempting to cut £1.5 billion from costs by 2011.

Lloyds today insisted the net reduction would be in 2,600 jobs, as a number of staff would be redeployed in other parts of the business. Nevertheless, while 720 operational staff will be redeployed, 550 jobs will be offshored and a further 200 contractors will stop working for the bank.

The job cuts include IT, but Lloyds did not put an exact number on the technology roles affected.

In spite of the cuts to operational stuff, Lloyds maintained that group operations were “at the heart” of its business. The division was “essential” and ensured the “smooth running” of its business, it said.

Mark Fisher, director of integration between Lloyds and HBOS – which merged in 2008 – said the cuts were “another important step in bringing our businesses together”.

Unions representing Lloyds workers said they were angry at the news. The Lloyds TSB Union, which expressed dismay that staff being made redundant were called “colleagues” by "top managers", said it was “stepping up” its campaign against offshoring, contacting MPs and talking to customers outside the bank’s branches.

Another union, Unite, said it was angry at what it called “the depth of corporate arrogance” in a “taxpayer-supported bank”. It called for the immediate suspension of all job losses.

Lloyds has made numerous job cuts in recent months. In July, it cut 659 IT staff, and had made over 8,700 group-wide redundancies in the 12 weeks before that.