1,650 jobs to be lost as NatWest fights BoS

Click to follow
The Independent Online

NATWEST, THE clearing bank, yesterday delivered its riposte to Bank of Scotland's £22bn hostile bid, unveiling plans to streamline the bank by cutting 1,650 head office jobs, selling off a raft of businesses and returning a minimum of £1.5bn to shareholders next year.

NATWEST, THE clearing bank, yesterday delivered its riposte to Bank of Scotland's £22bn hostile bid, unveiling plans to streamline the bank by cutting 1,650 head office jobs, selling off a raft of businesses and returning a minimum of £1.5bn to shareholders next year.

The staff reductions announced in the defence document posted to shareholders yesterday are in addition to the 10,000 which NatWest has already pledged to cut by 2001.

Sir David Rowland, the bank's NatWest chairman, said NatWest was only at the start of evaluating what needs to be done. In his letter to shareholders Sir David said he plans to cut the number of business units from 13 to five, "de-layer" management to speed decision-making and simplify product lines. "The programme of improving the bank's efficiency is ongoing. We are talking about a hugely valuable franchise from which much more value can be delivered."

At the same time the bank revealed that Ron Sandler, Sir David's former colleague at Lloyd's of London who has joined NatWest as chief operating officer, is entitled to a minimum payment of £112,500 for the three months up to the end of the year, and a bonus "for outstanding performance", worth twice his £450,000 salary.

Peter Burt, whose hostile bid for the bank has threatened to cause one of the biggest upsets in British financial history wasted little time in attacking Sir David for "stealing Bank of Scotland's clothes".

"We had the plan. They adopted our plan." Mr Burt said. "The difference is we have the people. They do not."

The businesses NatWest intends to put under the hammer include Gartmore, the asset management business, Greenwich NatWest, the bank's bond broking business, Ulster Bank and NatWest Equity Partners, the private equity operations. NatWest will however keep Coutts, the Queen's banker.

Analysts said that with the exception of NatWest Equity Partners, the sell-off list was identical to the one drawn up by BoS. The main difference, they said, was on cost savings where NatWest refused to put a figure on the savings it intends to achieve, concentrating instead on attacking BoS's claim that it could save £1.05bn a year.

Sir David admitted that BoS's bid had been a catalyst for changes that NatWest ought to have done itself. He said: "We could reflect on why British institutions don't get moving until they get a kick up the backside. But it is not easy to be one man on a soapbox. You need catalysts to make people realise what is possible." The City reacted coolly to the document, marking NatWest's shares down by nearly 2.5 per cent to £13.74. "This is not innovative thinking. It is basically 'this is what it takes to save ourselves'," one said. "Judging by the share prices there is room for a counterbid. We think NatWest is worth at least £16." The cuts announced yesterday include 1,000 loses from a total head office staff of 3,150 and a further 650 in the corporate bank. NatWest said it intends to achieve the head office cuts by the end of the year.

Staff were told yesterday that they have 10 days to decide whether to opt for voluntary redundancy or hang on for potentially more generous compulsory terms.

Gwyn Bates of Unifi, the banking union said yesterday: "People are shocked. The lack of communication to staff so far is having a serious effect on an already diminished morale."

Comments