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RBS to axe 30,000 jobs at investment banking division RBS to axe thousands of jobs in major overhaul
(about 1 hour later)
Taxpayer-backed Royal Bank of Scotland is set to announce a massive round of job cuts that could see as many as 30,000 staff asked to leave, according to reports. Taxpayer-controlled Royal Bank of Scotland will next week declare that it is to shrink radically with the loss of thousands more jobs.
RBS is next week expected to announce a massive round of job cuts that will take its staff numbers to their lowest level in more than a decade, in a bid to bolster its capital and return to profit. Including the sale of its US Citizens bank, which employs 18,500, and the separation of Williams & Glyn’s, which has 4500 staff, RBS could reduce its current headcount from 120,000 to fewer than 100,000, a level not seen since it took over NatWest in 2000.
The 81 per cent-taxpayer backed lender is also expected to announced its withdrawal from its most aggressive investment banking activities and plans to offload its international businesses, according to the FT. RBS declined to comment on specific job numbers today but its chief executive Ross McEwan and chancellor George Osborne have made it clear they want the bank to shrink, particularly the investment bank, which employs 11,000 people.
The cuts are part of new chief executive Ross McEwan's attempts to return the bank to profit and regain customer's trust after a string of accusations around RBS's treatment of small business customers. At the bank’s third-quarter results in November, McEwan said: “I think over time the shareholders will see a much simpler bank that actually gives a better long-term return.
The Serious Fraud Office announced in November that it is investigating allegations that RBS defrauded small companies, forcing them to go bust. “We’ve got parts of this business that are not returning their return on equity — that’s actually greater than the return on the cost of our capital, and we need to start fixing those as our next phase of making this a much better bank.”
Under McEwan's plans RBS, which employs 120,000 people, is expected to refocus on retail customers, small businesses and larger corporations. He emphasised the need to cut costs, saying: “A 65 per cent cost-to-income ratio for really what is turning into a retail-end corporate bank is too high. At this stage, our view is that it needs to be in the mid-50s; we’re doing the work for February, which will show what it should be, but my targeting is in that mid-50s.”
RBS is expected to announce a loss of £8 billion when it reports its full-year results next Thursday. Some senior bankers suggest that McEwan is looking at merging RBS investment bank into its corporate banking division in much the way things run at Lloyds Banking Group.
Additional reporting agencies. McEwan said in a video posted on the company’s website this week: “My aspiration is not to run the world’s biggest bank. My aspiration is to run the best bank in the UK, nothing to do with size. A lot of our costs are old costs related to a big global group that we are not any more.”
“The new focus of RBS is unsurprising considering the comments from the Chancellor on the future focus of RBS,” said Berenberg banking analyst James Chappell. “The issue is that this will make 10 years of restructuring for RBS and create further uncertainty, in our view.”
RBS shares rose 6.1p to 361.8p.
Separately, Yorkshire and Clydesdale banks, owned by National Australia Bank, said they had been hit by higher-than-expected customer complaints over mis-selling payment protection insurance and interest-rate hedges.
The banks said: “regulators continue to take an active stance in our management of customer claims.”
This means NAB may have to up provisions in its half-year results to March.