RBS chief moves to reassure Ulster Bank staff on cuts
Up to 30,000 jobs expected to go at group, but CEO says 'no big announcement' next week
Royal Bank of Scotland (RBS) is setting aside £3 billion for new litigation and customer compensation claims, which is expected to push the lender into an annual loss of approximately £8 billion. Photo: Bloomberg
Royal Bank of Scotland Group chief executive Ross McEwan moved to reassure employees that there will be “no big announcement” on job cuts when the lender publishes the results of its strategic review next week.
“This type of thing is frustrating and unsettling,” Mr McEwan (56) wrote in a memo to employees today. “This has been building over recent weeks and months and was always to be expected ahead of our strategy update.”
Ulster Bank employees are among the thousands who have been left fearing for their jobs following reports of as many as 30,000 positions expected to be cut.
However, in a letter to union representatives at the IBOA, Mr McEwan said the Irish unit was committed to follow the procedural agreement that was recently laid down between the bank and IBOA, which lays down ground rules for negotiation between the union and management. The agreement, which was ratified late last year, also provides for independent mediation if the parties cannot reach agreement on any issue.
General secretary of the IBOA Larry Broderick said the confirmation from the chief executive would be of some degree of comfort to employees, who have already been hit with 1,600 job cuts in the past four years.
“It is also a concern for customers who have remained loyal to Ulster Bank – despite a number of recent difficulties caused in part by the flawed provision of support services from RBS,” he said. “Further cuts in the branch network, as well as outsourcing, may also affect access to services for many customers – as well as causing increased pressure on the remaining staff. Mr McEwan’s commitment that the existing framework will be used for negotiations on future change offers the prospect that any further restructuring might be managed with greater care and consideration for both customers and employees.”
Mr McEwan, who replaced Stephen Hester as CEO in October, will next week detail his plan to shrink RBS’s investment-banking and overseas units to focus on consumer and commercial banking in Britain, according to a person with knowledge of the matter who asked not to be identified before the announcement. The overhaul will lead to job losses over the coming years, the person added.
The group is expected to use annual results next week to announce its exit from many of its riskier investment bank activities, as well as much of its overseas business.
RBS employs 120,000 staff but the Financial Times said the downsizing by chief executive Ross McEwan will lead to a reduction of about a quarter in the group’s headcount over the next three to five years.
The bank, which is just over 80 per cent-owned by the Government, will refocus its activities on retail customers, small businesses and larger corporates.
Mr McEwan said in a video posted on the company’s website this week: “My aspiration is not to run the world’s biggest bank. My aspiration is to run the best bank in the UK — nothing to do with size. A lot of our costs are old costs related to a big global group that we are not any more.”
The group’s annual results on Thursday are set to reveal an annual loss of close to £8 billion for 2013 after it stunned the City last month by revealing a string of scandal-related financial charges worth more than £3 billion.
RBS is expected to make heavy cuts to the 11,000 jobs in its investment bank, including a retreat from its US and Asian markets businesses. The planned sale of its US retail bank Citizens will remove 18,500 jobs, while further reductions will come from its float of Williams & Glyn’s, which employs about 4,500 staff.
The group has axed an estimated 40,000 jobs since its taxpayer-backed rescue in 2008.
(Additional reporting: PA, Bloomberg)