RBS to lay off 3,500 employees

LONDON - Reuters

A worker walks in the foyer of a RBS office in London. RBS is to cut about 3,500 jobs over three years. AP photo

The Royal Bank of Scotland (RBS) is to axe 3,500 investment bank jobs and sell or shut equities and advisory business under a three-year plan to further reduce risk and focus more on domestic retail and corporate banking.

RBS, 83 percent owned by the UK government, yesterday said it will exit from cash equities, corporate broking, equity capital markets and mergers and acquisitions businesses.

It aims to cut the balance sheet of its former global banking and markets (GBM) business by 120 billion pounds ($184 billion) to 300 billion in the next three years.

“The closure of equities has been well flagged, what’s more encouraging is the downsizing of the balance sheet. It’s taking more risk out of the business, taking more capital dependency and wholesale funding requirements out,” said Mike Trippitt, an analyst at Oriel Securities.

RBS said it is adapting to “significant new pressures” on its wholesale banking business, and the changes will make it more conservatively funded, more focused on customers and better able to deliver stable returns.

UK finance minister George Osborne last month told the bank to shrink GBM further to become less risky, even after halving in size in the last three years.

The job cuts add to 2,000 layoffs at GBM in the second half of last year, and together account for more than a quarter of GBM’s 18,900 staff at the end of September.

“Enough is enough. 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,” said David Fleming, Unite union national officer, estimating RBS had cut 22,000 jobs in Britain since 2008.

RBS is under fire for potential multi-million pound bonus payouts for Chief Executive Stephen Hester and GBM boss John Hourican.

The bank announced it will separately cut 950 jobs at troubled Irish unit Ulster Bank.