Lloyds Banking Group is set to cut 4,500 IT jobs, a move immediately branded as “devastating” and a “disgrace” by trade unions. The part-nationalised bank will cut 1,600 permanent IT staff and 1,150 temporary contractors in the UK.

The remaining 1,750 posts being cut are located in India. The cuts represent 40 percent of Lloyds’ IT workforce, according to the Lloyds TSB Union.

In spite of the scale of the cuts, Lloyds director of group operations, Mark Fisher, insisted the group was creating a "world class IT operation". Last November, Lloyds announced another 5,000 job cuts, principally back office staff, which followed 659 IT posts being cut four months earlier.

Under the new cuts announced today, the bank will close half of its 24 IT sites in the UK, with HBOS sites suffering the most, the union said. Some of the largest reductions will be at Edinburgh, Halifax, Leeds and Chester. A further 291 IT jobs will move to India, it added.

The permanent staff cuts in the UK include 602 application development and maintenance staff, the bank confirmed, as well as 312 service delivery staff, 128 enterprise architecture staff and 29 working directly for the chief information officer. UK contractors seeing their roles cut include 360 service delivery personnel, and 113 application contractors.

The cuts are a result of the integration of Lloyds and HBOS, with the group targeting £2 billion cost savings. Part of the savings will come from the heavy job cuts, and another part from the integration of systems onto a common architecture due to go live next year. The rest is other operational savings.

It is understood that some of the cuts affect roles that were created to integrate the two companies systems but are no longer required by the bank, and the rest of the cuts include functions that the bank sees as duplicated following the merger.

The bank insisted it would avoid compulsory redundancies as far as possible. In a statement, it said: “By making less use of contractors and agency employees, it reduces the impact on permanent staff.”

Both the Unite and Accord trade unions attacked the company for its plans.

"In a difficult economic climate, the chances of [the employees] finding similar roles will be very slim," said Clive Webster, deputy general secretary at Accord. He added that the move was “devastating for the hard-working and professional employees who are affected".

Lloyds Banking Group is 41 percent owned by the state. The Unite trade union branded the job cuts as “an absolute disgrace” because the bank is “kept alive” by taxpayers.