The Royal Bank of Scotland has announced it plans to cut up to 3,500 jobs in a bid to “reduce risk” to existing customers. While the job losses in the investment banking sector will mean more focus can be directed at their domestic retail and corporate banking sectors, some of the banking group’s many commercial properties may be forced to close. The equities and advisory service will either be sold or closed.-
The cuts will focus both on the UK and international offices. The banking group is separately expected to announce an estimated 950 jobs losses in Ireland, at RBS subsidiary Ulster Bank. This will be split with 350 job losses in Northern Ireland and the remaining 600 in the Irish Republic.
The announcement was met with disgust at Unite the Union, possibly due to the fact that, over the past two years alone, RBS has made around 30,000 employees redundant, with 22,000 of these being in the UK.
David Fleming of Unite the Union says “It is a disgrace that, while on a daily basis stories are emerging about the massive bonuses at the top of the bank, increasing numbers of jobs are being cut from amongst the hard working staff.”
However, RBS maintains that the cuts will greatly benefit its customers, as the changes to its system will make it more conservatively funded and delivering stable returns will become more likely than under the current system.
The bank, which is now 82 per cent owned by the British Government due to a £45.5 billion injection of taxpayer’s money, said the restructuring was necessary in order to prepare for new UK regulatory requirements. Under the new laws, banks must separate their core UK operations from investment banking activities, which come at a much greater risk of loss of equity and therefore put the economy at risk.
The change in strategy was announced by Chancellor George Osborne in December 2011, following a report into the bank by the Financial Services Authority highlighting the “errors of judgement and execution” by RBS management, which contributed to the failure and subsequent bail-out by taxpayers in 2008.
Mr Osborne said “Investment banking will continue to support RBS’s corporate lending business, but RBS will make further significant reductions in the investment bank, scaling back riskier activities that are heavy users of capital or funding.”