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RBS to cut jobs; India also likely to see pink slips

RBS to cut jobs; India also likely to see pink slips
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First Published: Mon, Nov 24 2008. 12 30 AM IST

Rightsizing: Customers at an RBS branch in London. The bank is expected to cut about 2,700 jobs globally. AP
Rightsizing: Customers at an RBS branch in London. The bank is expected to cut about 2,700 jobs globally. AP
Updated: Mon, Nov 24 2008. 12 40 PM IST
The Royal Bank of Scotland, or RBS, is set to announce significant cuts to employees of its global banking and markets (GBM) division, including in India. A formal announcement is expected as early as Monday from individual country heads.
In October 2007, RBS led a consortium of Fortis Group of the UK and Banco Santander SA of Spain to acquire ABN Amro Bank NV’s banking business globally, including in India. ABN Amro has been operating in India since 1920. It has around 9,000 employees spread over 28 branches.
The GBM division in India employs about 250.
“We do not know how many of us will be asked to go but we suspect the number won’t be small,” said one executive of ABN Amro under condition of anonymity.
Rightsizing: Customers at an RBS branch in London. The bank is expected to cut about 2,700 jobs globally. AP
According to this executive, the bank is expected to cut about 2,700 jobs globally in its GBM division. The GBM business includes equity markets business, treasury operations, corporate banking and investment banking activities.
In an email response to Mint’s questions, an RBS spokesperson wrote: “RBS is having to respond to slowing economic conditions. Job losses will, unfortunately, be unavoidable in this situation. We consult with our employees and all relevant stakeholders ahead of any specific announcements on jobs as a matter of policy.”
A 21 November email sent by John McCormick, chief executive officer, GBM, Asia Pacific, RBS, to employees says: “While many of our underlying businesses in Asia Pacific (Apac) remain strong and revenues have been stable or increasing in some areas, the fact remains that we need to reduce our costs and right-size our business in line with market conditions and outlook.”
According to the email, “Details on the process in your country will be communicated to you by your country heads on Monday”. It also says, “Once social partners have been consulted and local regulatory approvals received, we will then be in a position to communicate specific timelines.”
“Although most regrettable, it is important that we take this action immediately ahead of the global strategic review (as announced by our new CEO, Stephen Hester), so that we are heading into 2009 in a stronger competitive position to seize future opportunities,” McCormick wrote. “Whilst Apac will be less impacted than other regions, it will be a front to back across the board exercise and unfortunately some of our colleagues will be affected in all countries in which we operate.”
The email was sent a day after RBS chairman Tom McKillop admitted last week at the firm’s shareholder meeting in Edinburgh that the timing of the ABN Amro Bank acquisition had added to RBS difficulties. The RBS shareholders approved a £20 billion (Rs1.48 trillion) bailout plan at the general meeting.
Since then, the employees of the Dutch bank in India have been on the edge.
“We knew it was coming,” said a senior employee of the GBM division. He also did not want to be named considering the sensitivity of the issue.
Even though the Dutch National Bank, the banking regulator, has approved the overall transition plan, the transfer of ABN Amro’s business in the Netherlands to RBS is still pending and is expected to be completed only in mid-2009. Only after the completion of this process can ABN Amro become RBS in India.
ABN Amro’s India assets grew 28% to Rs36,617 crore in fiscal 2008, from Rs28,518 crore in 2007. Its Indian operation reported a 27% decline in net profit for 2007-08 to Rs280.6 crore, from Rs385.3 crore in the previous fiscal.
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First Published: Mon, Nov 24 2008. 12 30 AM IST