Wednesday, April 8, 2009

Devastation As Royal Bank of Scotland Cuts 9,000 Jobs

. Wednesday, April 8, 2009

By stockOzone team

The scale of the part-nationalised lender's latest redundancy programme – under plans to cut 9,000 technology, property, operations and processing jobs worldwide in the next two years – provoked union outrage.

The bank will cut 4,500 of these jobs in Britain in a clear-out of its back-office operations - on top of the 2,700 UK positions lost in the retail and corporate bank earlier this year.

Vince Cable, the Liberal Democrat Shadow Chancellor, said: "As he enjoys his multimillion-pound pension, Sir Fred Goodwin should spare a thought for the thousands of people he has now put out of work."

Rob MacGregor, national officer for Unite, added that the news was "truly devastating".

"Unite is appalled that thousands of people who form the backbone of the RBS operations are to be made redundant," he said. "These employees are totally blameless for the current position which RBS is in, yet they are paying for the mistakes at the top of the bank."

News of the cuts came as the UK taxpayer's stake in RBS rose from 58pc to 70.3pc after investors shunned its offer to convert the Government's £5bn of preference shares into ordinary stock. Existing investors were given the chance to buy the stock at 31¾p but only 0.7pc was taken up as RBS shares have sunk below the offer price, leaving the converted shares with the state.

The UK taxpayer's economic stake in RBS could climb to 95pc under plans to ringfence £325bn of assets with the Government’s insurance scheme for toxic debt.

Since Stephen Hester took over as chief executive in October, RBS has announced 14,400 job cuts from its 170,000-strong workforce, 106,000 of which are in the UK.

Mr Hester has indicated there will be more to come as he aims to reduce the annual cost base by £2.5bn a year, or 14pc.

Mr Hester said: “We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable. From this we want the Government to be able to realise value from its investment in RBS. To do so we need to cut our costs, as in all businesses, given the current recession. Unfortunately, that means taking difficult decisions about jobs.”

RBS has indicated that at least 20,000 jobs – 12pc of staff – will be removed as the bank is shrunk and re-invented as a more traditional lender. It has taken £20bn of taxpayer money as well as the £325bn of insurance and reported the largest-ever UK corporate loss, of £24bn, last year.

Employers’ group the CBI recently predicted that the UK financial services industry will lose 30,000 jobs in the next six months.

RBS said that after natural attrition and a staff placement programme, “the actual number of jobs lost is expected to be significantly lower”. Compulsory redundancies will only be “a last resort”.

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