Lloyds Banking Group is to cut a further 1,200 jobs as it continues its drive to make the company £1.5bn ($2.5bn) per year cheaper to run by the end of 2011.

Around 850 posts in the group operations and insurance will go. Lloyds will also let a further 370 contract and agency staff go by next April. But the group is also creating 180 new permanent roles, mainly in IT and collections.