The ailing Scottish bank said this morning that it plans to give about 1,000 of its UK staff the boot, plus another 2,000 people from its workforce across the world. Given that the bank’s finances are in such a bad way that it’s been forced to ask the taxpayer for about £20bn, this shouldn’t come as a massive surprise to anyone. But after a week in which the likes of BT, Virgin Media and Yell have all announced swingeing cuts, it’s only going to add to the general despondency.
However, in this case there may be a distinct lack of sympathy for those affected, since all the redundancies are going to come from the bank’s global banking and markets division – in other words, the bankers and traders widely blamed for getting RBS into this mess in the first place by being far too free and easy with the bank’s money (though let’s not forget its misadventures in the US sub-prime market, and paying a fortune for ABN right at the top of the market). So its retail staff shouldn’t be affected, but its City presence certainly will.
Since the cuts are only happening now, after the Government has agreed to pump in a huge injection of public money, there’s naturally been speculation that new CEO Stephen Hester has been browbeaten into this by the Treasury. However, the bank has denied that today’s decision was anything to do with the Government, suggesting it was just doing what everyone else was doing in response to market conditions (albeit a bit later).
But one thing’s for sure: Hester will be very keen to get all the bad news out of the way as soon as possible. With RBS on course to post a full-year loss for the first time in its 300-year history in 2008, he might as well write it off and use the rest of the year to take as much financial pain as he can. That will give him the best chances of engineering a recovery in 2009 – and taking all the credit for it.
RBS is hardly alone in its woes, of course – most of the big banks have either cut headcount already or are planning to do so (the Wall Street Journal reports today that Citigroup is planning to cut ‘at least 10,000’ jobs across its global workforce). And it’s worth bearing in mind that today’s figure represents just 1% of the bank’s 100,000-strong UK workforce (plus about 3% of its non-UK workforce). Presumably the bank will lose a similar proportion of people every year anyway, through natural churn – so these are not exactly savage cuts.
But none of this will be any consolation for those affected, of course...
In today's bulletin:
RBS adds to gloom with another 3,000 job cuts
Virgin and easyJet swoop on Gatwick
Bulldog spirit for British bosses
MT's Week in 60 seconds
Work your way out of a tight spot, with YouTube