Lloyds Bank just did Royal Mail a huge favour- by killing its competition

Whistl, formerly TNT Post, announced this morning that it is cutting door-to-door services in London, Liverpool and Manchester and will instead rely on Royal Mail for what it calls "final mile" delivery - getting letters and parcels from local distribution centres to your letter box.

Royal Mail shares leapt almost 5% on the news. Whistl is Royal Mail's biggest competitor when it comes to letter delivery, although Britain's biggest postal service faces much more competition in the parcel market.

Royal Mail has taxpayer-backed Lloyds Bank to thank for knocking out the competition. Lloyds' private equity arm LDC recently decided not to invest in Whistl and, in an email sent to Business Insider, the company blamed this for the scrapping of delivery.

While it's a boost for Royal Mail, it's a disaster for the near 2,000 Whistl employees who currently deliver letters. 

Whistl confirmed that it has begun a consultation on redundancies, with Manchester Evening News reporting that many of the employees are on zero-hour contracts meaning they will not be paid during the process. A spokesman for Whistl told Business Insider that zero-hour workers would be paid this week but pay beyond that would depend on negotiations with unions.

It's the second big blow for workers in the delivery business this year. Employees of parcel delivery business City Link were told on Christmas Day they were being made redundant as the business went into administration.