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Royal Bank of Scotland axes 3500 jobs

Reported by AAP
Thursday, January 12, 2012
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State-rescued Royal Bank of Scotland says it would cut about 3500 more jobs over the next three years as the group shrinks its investment banking activities as part of a major overhaul.

The lender, which is 82 per cent state-owned, also outlined plans to re-organise its wholesale banking operations into two divisions - Markets and International Banking - and downsize or cease other selected activities.

The company will exit businesses including cash equities, corporate broking, equity capital markets, and mergers and acquisitions.

It will also implement "significant" reductions in its balance sheet, funding requirements and costs.

"RBS has today announced changes to its wholesale banking operations to ensure they continue to deliver against the group's strategy," a statement said on Thursday.

"At this stage we envisage a further net employment reduction over three years of circa 3,500, split between our UK and non-UK locations, in addition to the approximately 2,000 reduction in staff in (investment division) Global Banking & Markets in the second half of 2011."

The latest round of job cuts comes amid media reports that Global Banking and Markets boss John Hourican was due to pick up STG4 million ($A5.98 million) in long-term incentive shares that he was awarded in 2009.

RBS has now slashed around 34,000 jobs since October 2008 when it was rescued by the British taxpayer at the height of the global financial crisis.

The group, under the leadership of then-chief executive Fred Goodwin, was hit at the same time by the disastrous takeover of Dutch giant ABN Amro at the top of the market in 2007.

The latest round of job cuts sparked fresh anger from Unite, Britain's biggest trade union.

"For RBS to cut 3,500 jobs globally is staggering," said Unite official David Fleming.

"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."

The structural overhaul is aimed at moving the bank towards the ring-fencing requirements that were announced by the Independent Commission on Banking and adopted by the government last year.

The ICB recommended that banks should separate their retail and investment divisions to help prevent a repeat of the global financial crisis that triggered massive state bailouts.

"It is clear that, particularly in the wholesale banking arena, significant new pressures have emerged," group chief executive Stephen Hester said in Thursday's statement.

"The changes we are announcing today seek to ensure that RBS is at the front of the pack in pursuing a strategy that reflects the environment we expect to operate in.

"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."

More details will be provided in annual results that are due on February 23. The new plans will begin immediately but may take up to three years to implement.

Britain's financial watchdog said in a key report last month that RBS had almost collapsed due to poor management, particularly over the ill-fated ABN Amro takeover, and also weak regulation.

The Financial Services Authority, seeking to address what went wrong in the run-up to the lender's massive STG45.5 billion ($A68.03 billion) state bailout, said RBS had conducted "inadequate" due diligence into ABN Amro.

The FSA also called for tougher rules to make bankers more accountable for their actions.

26/11/2014 07:41Sydney, Australia. 26 November,2014
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