30,000 jobs must go to make RBS a boring bank, says McEwan

RBS CEO Ross McEwan's plan to axe up to 30,000 jobs and effectively dump i-banking looks like an admission that the business in its current form is beyond rescue.

by Andrew Saunders
Last Updated: 27 Feb 2014

The swingeing plan, set to be announced next week, will see the 81% taxpayer owned bank cull one fifth of its 120,000 strong workforce and may include exiting its high-risk US-based investment banking business as it shrinks to focus on lower-risk ‘boring’ corporate, retail and small business lending. Head count would fall to below 100,000 for the first time since 2000.

It is also expected to dispose of large parts of its Asian investment bank, and to make what few investment bankers would then remain on its payroll into a support division of its corporate banking arm. How are the mighty fallen.

In a video posted on RBS’s website, McEwan says that his ‘aspiration is not to run the world’s biggest bank. My ambition 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 anymore.’

This plan looks like a final admission that the RBS of old - expansive, super-confident and very, very wrong - has been deemed un-saveable by McEwan and his top team and is to be summarily dismantled. So chancellor George Osborne has got his way - this is precisely the task that original ‘rescue’ CEO Stephen Hester refused to countenance, on the grounds that without its i-bank, RBS’s potential profitability would be fatally weakened. Now we may discover who was right.

The recent announcement of an expected loss of £8bn this year has also provided McEwan with the proverbial ‘burning platform’ to help convince staff and shareholders that such draconian measures are required. Given the smoke and mirrors nature of bank reporting, that does seem a remarkably convenient piece of timing.

It would be interesting to know what McEwan’s oppo Antony Jenkins makes of this news - when he took over at Barclays, many observers expected a similar retreat from investment banking into safer retail operations. But it has not happened. Has Jenkins simply realised that Barclay’s can’t afford to lose all that revenue, or has the glitz and glamour of the trading floor turned his head? Answers on a postcard please.  

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