London: UK’s state-owned lender Royal Bank of Scotland (RBS) has cut 3,500 jobs as part of a reorganization of its investment banking arm. The cuts, which are to be phased in over three years, will largely affect the 18,900 employees in its Global Banking and Markets division, which offer advice on mergers and acquisitions. “Our goal from these changes is to be more focused for customers, more conservatively funded, more efficient and with better, more stable returns for shareholders overall,” chief executive Stephen Hester said in a statement.
The bank has been under pressure to pull back from its ambitions to be a global investment player. The strategy also dovetails with British government efforts to force banks to separate their retail operations from their more volatile investment banking.
RBS led a takeover of Dutch bank ABN Amro in 2007, only to run into huge problems in 2008, when the global financial crisis caused a severe credit crunch. The group was on the brink of collapse in 2008 when the UK government bailed it out. It is now 83% owned by the taxpayer.
The latest cuts are in addition to the 2,000 losses announced by the bank last summer. The fresh losses mean 11,000 posts have been cut at the division from the pre-banking crisis headcount of 24,000. RBS said it will now exit from the mergers and acquisitions. “This strategy has succeeded in making RBS stronger and placing us on the road to long-term success,” Hester said.
The job losses come amid reports that John Hourican, who will continue to oversee the restructuring of the business, is in line to pick up £4 million ($6.1 million) in long-term incentive shares awarded in 2009.
Union representatives described the job cuts as staggering. “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 among the hardworking staff,” said David Fleming, a Unite national officer.