RBS sparks further ire by axing another 3,500 jobs

Taxpayers wanted to see RBS punished for its mistakes - but the consequences were bound to be ugly...

by James Taylor
Last Updated: 19 Aug 2013
Another round of job cuts at state-owned Royal Bank of Scotland: this time 3,500 back-office positions have been earmarked for the chop. According to the Unite union (which, as you'd expect, is up in arms) this will take the total jobs cut by RBS since 2009 to more than 20,000 - a massive number, particularly in such a short space of time. When the taxpayer bailed out RBS last year, there was widespread support for the idea of cutting the bank down to size, in part as punishment for its SirFredGoodwinist excesses. But that was always going to mean thousands of job losses - and, in all likelihood, no obvious upside for the customers who now effectively own it...

These latest cuts will be in its business services arm - RBS plans to shut at least 12 of its service centres around the UK, resulting in the loss of thousands of IT and admin jobs over the next couple of years. It has promised to do everything in its power to support/ redeploy staff, and to 'keep compulsory redundancies to an absolute minimum'. But unsurprisingly, this hasn't been enough to appease the angry Unite, who described it as a 'horror story' - particularly in light of the bank recently posting a pre-tax profit of £1.1bn for the first half of the year. As we said at the time, it's a lot easier to justify cuts when you're loss-making.

It's horrible news for the staff involved. But turning RBS from its bloated pre-crash state into a slimmer, more stable, less ambitious beast was always going to be a painful business. Rebuilding its battered balance sheet has meant selling off assets, as well as taking money from the taxpayer (which in itself forced it into further asset sales, to comply with EU state aid rules). And a smaller bank requires fewer people to run it.

The irony is that it could well be the bank's customers - i.e. taxpayers - who lose out. Cutting back office staff might seem the easiest way to save money, but it could make the bank less efficient. And opening up its branch network to rivals won't necessarily do us any favours either: Santander, the Spanish bank that has just bought a load of its branches as part of a big UK expansion spree, has today been named and shamed by the FSA as the worst bank for customer complaints. It got 216,158 in the first half of the year, which is around one a minute - the highest ratio of complaints to customers of any bank. So more competition isn’t necessarily a good thing…

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