ROYAL BANK of Scotland is to cut up to 9,000 jobs worldwide, in areas such as technology and call centres, in the largest announcement of job losses at a British bank this year.
The bank, which is majority owned by the British government having been brought to its knees by the credit crunch last year, has already cut 2,700 jobs from its 106,000 UK workforce this year. It has also slashed about 10,000 jobs in its investment banking divisions in the past year as part of a programme to reduce annual costs by £2.5 billion (€2.8 billion) within three years.
The latest cuts, which total about 5 per cent of the group’s total workforce worldside, come in RBS’s manufacturing division.
In Ireland RBS owns Ulster Bank and former building society First Active. At the end of January Ulster Bank announced the two brands would be merged with 45 First Active branches closing and the remaining 15 being transferred to Ulster Bank, with the loss of 750 jobs.
“All anticipated Ulster Bank group manufacturing job losses in Ireland during 2009 are included in the 750 voluntary redundancies announced at the end of January,” the bank said in a statement.
Parent RBS said 9,000 jobs would be affected globally – including 4,500 in Britain – over the next two years, although it suggests the number of jobs lost will be “significantly” lower.
It hopes to make most of the reductions through voluntary redundancies. It has identified 650 new job opportunities in the UK where staff can be redeployed.
The 9,000 posts constitute about a fifth of the manufacturing division’s 45,000 staff – 27,000 of whom work in the UK.
The manufacturing division also employs 4,000 staff in the US and 4,000 in Europe, with another 10,000 in Asia. RBS said about 4,500 roles would go from these regions.
In January RBS announced losses of £7.9 billion for last year, on top of which it wrote off £16.2 billion of goodwill relating to acquisitions, most notably Dutch bank ABN Amro. This equated to the biggest corporate loss in British history.
The bank said the cuts were necessary to help restore profitability. RBS could be forced to cut even more jobs as its seeks to cut costs by £2.5 billion, or 14 per cent, over three years and return the bank to investor control. Job losses of 20,000 are “not irresponsible speculation”, chief executive Stephen Hester said in February.
“To cut 14 per cent of costs when staff costs are around 60 per cent of total expenses, there are a lot of job losses to come,” said Simon Willis, a London-based analyst at NCB Stockbrokers. “We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable,” Mr Hester said. “Unfortunately, that means taking difficult decisions about jobs.”
RBS also said that its latest placing and open offer had been snubbed by investors, with only 0.7 per cent taking it up. This means the British government stake in RBS has risen from 58 per cent to 70 per cent.
RBS has been the focus of public anger because of the £703,000 a year pension paid to former chief executive Fred Goodwin. The Unite trade union said it is unfair that RBS employees are losing their jobs because of the mistakes made by senior management.
“These employees are totally blameless for the current position which RBS is in, yet they are paying for the mistakes at the top of the bank,” the union said in a statement.
