Thousands face axe as chief admits RBS only half way through cull

Published on Friday 6 November 2009 21:20

THOUSANDS more jobs will be axed by Royal Bank of Scotland, the chief executive Stephen Hester admitted yesterday.

Almost 20,000 jobs have already gone or been notified since the bank hit the rocks in October last year, including 3,700 announced last week.

After announcing a narrowing of operating losses to 1.5 billion for the last three months against 3.5bn in the second quarter, Mr Hester said: "We are well over half way through what we have to do."

His comments raised the prospect of another 10,000 to 15,000 job losses worldwide, but Mr Hester said he would not provide further details or estimates and that "the first people to hear about jobs are our staff". However, he said that "the biggest announcements have been made".

About a quarter of the job losses have been compulsory, he said. It was also revealed that the part-nationalised bank has already eaten through nearly half the 60bn "excess" on toxic debts insured by the taxpayer.

RBS agreed this week to put 282bn in bad loans into the Asset Protection Scheme (APS), under which it shoulders the first 60bn in losses on the debts.

The taxpayer is liable for 90 per cent of any hit above that figure. But RBS – which will be 84 per cent state-owned – used 26.6bn of the buffer by the end of June. RBS made a pre-tax loss of 2.1bn for the July-September period – down from a 1.9bn profit a year earlier.

The bank has been dragged into the red by continuing credit losses in parts of the business it is winding down or selling, although bad debt charges are stabilising. Recent tentative signs of improvement make losses less likely.

Mr Hester, who hopes to return the bank to profit in 2011, said he was "upbeat but realistic" about the tough road ahead for RBS.

The bank said bad debts were "plateauing" but Mr Hester warned: "We owe it to everyone to be realistic and transparent."

He said: "Economic recovery is likely to be slow and the pain of economic adjustment will take years to subside. Our business will reflect these issues."

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