Home Business NewsEconomic News RBS announces 3,500 job losses

RBS announces 3,500 job losses

by LLB Editor
12th Jan 12 12:42 pm

Royal Bank of Scotland (RBS) has announced 3,500 job losses over the next three years as it downsizes its investment banking division, Global Banking and Markets (GBM).

GBM, which has employees in London, Manchester Stoke and Edinburgh, deals with financial services such as equity trading, debt advice and mergers and acquisitions. RBS explained that the strategy has been drawn up to cope with ring-fencing requirements put forward by the Independent Commission on Banking. Under the new guidelines, banks have been told to clearly separate their high-street banking from less-stable investment divisions.

It is also understood that the 83 per cent state-owned bank has been under mounting pressure from the government to give up aspirations of becoming a major global investment player. GBM, which currently employs 18,900 people worldwide, currently covers a range of services, including refinancing deals for Gatwick Airport and Tesco, as well as debt problems for Finland.

These latest job losses are in addition to the 2,000 that were announced last summer. Once this round of job cuts is complete it will mean that GBM has removed almost 11,000 employees from its workforce, which almost halves its pre-credit crunch headcount of 24,000.

This announcement comes in the wake of reports that John Hourican, head of GBM, is set to receive £4m in long-term incentive shares that he was awarded in 2009. Following RBS’s decision, David Fleming, Unite national officer, described how opting to cut down GBM’s headcount was “staggering”. He said: “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.”

Along with the cuts RBS has revealed there will be a restructure of GBM and Global Transaction Services, as the business is separated across two new divisions, labelled Markets and International Banking. As part of the changes the sale of equity capital markets, mergers and acquisitions and cash equities will be considered. During the nine months up to September, 2009, these had an income of £220 million and are unprofitable.

The bank has also revealed that it is considering selling off City broker Hoare Govett, which provides independent market advice to 100 listed firms overall, including 11 FTSE-100 companies. RBS acquired the corporate broking division as part of its ill-fated £48bn bid for Dutch bank ABN Amro in 2007.

These cost-cutting measures are being introduced by RBS as it tries to trim down its balance sheet from £420bn at the end of June to £300bn over the three years.

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