RBS axes 3,500 jobs at investment arm

 

Around 3,500 jobs will be cut at Royal Bank of Scotland over the next
three years under plans to shrink its investment banking arm, the
taxpayer-backed lender said today.

In a further blow for banking sector staff, RBS subsidiary Ulster Bank said it would cut 950 jobs in the Republic of Ireland and Northern Ireland, while Barclays revealed plans to axe more than 400 posts at its technology and infrastructure division.

The RBS job cuts at Global Banking and Markets (GBM), which has employees in Stoke, Manchester, Edinburgh and London, follows Government pressure for the 83% state-owned bank to pull back from its ambitions to be a global investment player.

Investors backed both banks, as shares in RBS surged more than 5% to near the top of the FTSE 100 Index, while Barclays gained nearly 2%.

But David Fleming, Unite national officer, said RBS's decision to reduce the headcount at GBM was "staggering".

"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," he said.

GBM, which employs 18,900 worldwide, deals with a range of financial services such as debt advice, equity trading and mergers and acquisitions.

Its range of work with companies and governments spans from refinancing contracts for Anglian Water, Gatwick Airport and Tesco to debt issues for Finland.

The job losses come amid reports that John Hourican, the head of GBM who will continue to oversee the restructuring of the business, is in line to pick up £4 million in long-term incentive shares that he was awarded in 2009.

The latest round of job cuts come on top of 2,000 losses announced by the bank last summer. The new losses will mean nearly 11,000 posts have been cut at GBM from the pre-banking crisis headcount of 24,000.

RBS said the strategy was designed to help move toward the ring-fencing requirements outlined by the Independent Commission on Banking and adopted by the Government last year.

The recommendation called for banks to ring-fence their retail, or high street, operations from their riskier investment banking divisions.

Meanwhile, the bank said it would restructure GBM and cash management division Global Transaction Services (GTS) by splitting the businesses into two new divisions - Markets and International Banking.

The changes include considering the sale or closure of its cash equities, equity capital markets and mergers and acquisitions businesses, which had income of around £220 million in the nine months to September and are currently unprofitable.

The bank also said it was considering the sale of its corporate broking arm, renowned City broker Hoare Govett, which offers independent market advice to 100 listed companies, including 11 of the FTSE 100 index.

Hoare Govett was acquired in RBS's disastrous £48 billion joint bid for Dutch bank ABN Amro in 2007.

GBM has suffered recently as market turbulence, driven by global recession fears, hit income - however, the division still recorded income of £1.1 billion in the three months to September 30.

RBS said it aims to reduce its balance sheet from £420 billion at the end of June to around £300 billion over the three-year period.

Chancellor George Osborne recently said the bank could "go further" in its reforms and should shift its business strategy towards personal banking, small businesses and corporate banking in the UK.

While the downsizing of GBM satisfies Mr Osborne's desire for RBS to scale back riskier activities, the revelation that Mr Hourican is set to receive a hefty performance-related payout will embarrass the Prime Minister who last weekend promised a crackdown on executive pay.

A binding vote for shareholders on executive salaries formed part of a proposal unveiled by David Cameron for a Government blitz on pay and bonuses in the City.

Last month, a long-awaited Financial Services Authority report said RBS was brought to its knees by "multiple poor decisions" and its "gamble" on buying ABN Amro.

The FSA blamed deficiencies in the management and culture at RBS prior to its £45.5 billion bailout and called for tougher rules to make bankers more accountable for their actions.

Meanwhile, Ulster Bank said it was necessary to make job cuts in order to compete in the financial sector.

It is the second major wave of job losses at the RBS division in Ireland after it announced 1,000 redundancies in 2009.

But Larry Broderick, general secretary of IBOA finance union and representing 3,500 workers, said the impact of the latest round of cuts could be even more severe than the cuts in 2009.

"The sheer magnitude of this second wave of proposed redundancies is breathtaking," he said.

Elsewhere, Barclays said it would make every effort to mitigate compulsory redundancies after announcing the cuts at its technology division, pointing out that the 422 job losses represented 0.74% of its UK staff.

A spokesman for the bank said: "We need to make essential changes to our technology and infrastructure division so that we can innovate in new technologies and services for our customers, and be as effective and efficient as possible."

PA

Start your day with The Independent, sign up for daily news emails
Sport
wimbledonScot will face Ivo Karlovic next
News
Hillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
Life and Style
Kissing
life
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test