RBS chief admits job losses part of review

Published on Friday 21 November 2008 08:55

THE new boss of Royal Bank of Scotland has admitted that he expects job losses to be part of his review of the company.

Stephen Hester was today starting his first full day at the helm of the Edinburgh-based bank.

A full review of the company is under way following shareholders almost unanimous approval of the 20 billion Government bail-out of the firm.

Mr Hester, who formally succeeded Sir Fred Goodwin as chief executive following yesterday's general meeting at the Assembly Hall in Edinburgh, admitted that job losses are likely.

He said that financial markets appear to be starting to stabilise but that the world is braced for a painful recession.

"My expectation is there will be job losses simply because economic activity levels will be lower," he said.

Shareholders backed plans to accept 5 billion of Government funding and a 15bn share issue underwritten by the Government.

But Mr Hester indicated that investors may snub the share issue as the 65.5p price is well above its current market price.

He said: "Shareholders are going to be economically rational and it will depend heavily on where the share price is when they have to make a decision."

During yesterday's meeting, outgoing chairman Sir Tom McKillop and former chief executive Sir Fred Goodwin apologised several times to shareholders for the company's situation.

Sir Fred, who was called upon directly from the floor, said: "I would just like to say I am extremely sorry this has come about. I entirely accept what the chairman expressed on behalf of the board, I am extremely sorry."

Earlier, chairman Sir Tom McKillop had expressed his "considerable regret" about recent events at the Edinburgh-based bank.

He said he was "profoundly sorry" about the impact that the financial crisis has had on shareholders, staff and customers.

He also acknowledged for the first time that last year's acquisition of ABN Amro had exacerbated RBS' problems.