RBS to see 30,000 job losses: Report

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RBS to see 30,000 job losses: Report
Agencies
Posted: Jan 25, 2009 at 1401 hrs

London A radical restructuring at the Royal Bank of Scotland may see as many as 30,000 job losses in the next three to five years, says a media report.

The Sunday Times has reported that the company's Chief Executive Stephen Hester is giving finishing touches to a "radical restructuring".

"As many as 30,000 jobs, out of 170,000, could go in the next three to five years as he scales back the bank's network.

A total of 10,000 jobs have already been lost," the newspaper today said in a report published online.

Hester is intending to take risk out of the firm's balance sheet, sell non-core operations and shut down businesses that sold problematic products that almost broke the bank.

Noting that this would be concentrated in the company's wholesale-banking division, the report said the plan would be unveiled to the bank's board in two weeks' time at an all-day meeting.

"RBS will maintain a global network of commercial banking operations, but it will pull out of a number of countries around the world thought to include Pakistan, the Czech Republic, Slovakia, Romania and Uzbekistan.

 

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RBS, worth £75 billion only two years ago, is now valued at £4.5 billion, even though it received £32 billion from taxpayers and shareholders less than three months ago.

The bank’s plight prompted calls for the outright nationalisation of RBS, with some MPs urging the Treasury to take over its day-to-day running.

Lloyds Banking Group, another bank bailed out by the taxpayer, saw its shares plunge 34 per cent yesterday. Barclays and HSBC also fell.

The turmoil suggested that the Government’s second massive rescue package had failed to restore confidence to the financial sector. It was a graphic illustration of continued banking uncertainty that prompted calls on the Government from Labour MPs to nationalise the whole system, an idea resisted firmly by Alistair Darling, the Chancellor, last night.

The scale of losses at RBS is breathtaking. The bank, which also owns NatWest, estimated that bad debts and writedowns on past acquisitions could leave it as much as £28 billion in the red for 2008, nearly double Vodafone’s record £15 billion loss in 2006.

The bank’s admission that it had paid between £15 billion and £20 billion too much for the Dutch bank ABN Amro last year prompted an angry response from Mr Brown.

The Prime Minister was furious that British taxpayers were now having to pay for losses that were incurred on foreign investments.

“Almost all their losses are in the sub-prime markets in America and related to the acquisition of the bank ABN Amro,” he said. “And these are irresponsible risks which were taken by a bank with people’s money in the United Kingdom.”

Sir Fred Goodwin, who oversaw the bank’s acquisitions spree, resigned as chief executive in November when the Treasury was forced to acquire a 58 per cent stake to keep RBS afloat.

George Osborne, the Shadow Chancellor, said that the taxpayer had already lost £17 billion on the Government’s investments in the banks last October. He said that in taking a stake in RBS ministers had not understood what they were buying and had not attempted to find out. “They didn’t appear to know that RBS was preparing to post the largest loss in corporate history,” Mr Osborne said.