Taxpayer-controlled Royal Bank of Scotland will next week declare that it is to shrink radically with the loss of thousands more jobs.
Including the sale of its US Citizens bank, which employs 18,500, and the separation of Williams & Glyn’s, which has 4500 staff, RBS could reduce its current headcount from 120,000 to fewer than 100,000, a level not seen since it took over NatWest in 2000.
RBS declined to comment on specific job numbers today but its chief executive Ross McEwan and chancellor George Osborne have made it clear they want the bank to shrink, particularly the investment bank, which employs 11,000 people.
At the bank’s third-quarter results in November, McEwan said: “I think over time the shareholders will see a much simpler bank that actually gives a better long-term return.
“We’ve got parts of this business that are not returning their return on equity — that’s actually greater than the return on the cost of our capital, and we need to start fixing those as our next phase of making this a much better bank.”
He emphasised the need to cut costs, saying: “A 65 per cent cost-to-income ratio for really what is turning into a retail-end corporate bank is too high. At this stage, our view is that it needs to be in the mid-50s; we’re doing the work for February, which will show what it should be, but my targeting is in that mid-50s.”
Some senior bankers suggest that McEwan is looking at merging RBS investment bank into its corporate banking division in much the way things run at Lloyds Banking Group.
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 new focus of RBS is unsurprising considering the comments from the Chancellor on the future focus of RBS,” said Berenberg banking analyst James Chappell. “The issue is that this will make 10 years of restructuring for RBS and create further uncertainty, in our view.”
RBS shares rose 6.1p to 361.8p.
Separately, Yorkshire and Clydesdale banks, owned by National Australia Bank, said they had been hit by higher-than-expected customer complaints over mis-selling payment protection insurance and interest-rate hedges.
The banks said: “regulators continue to take an active stance in our management of customer claims.”
This means NAB may have to up provisions in its half-year results to March.