Michael Blackley: Staff pay as RBS is held to account for a right royal mess

Published on Wednesday 4 November 2009 08:54

IT IS a story which has rarely been out of the headlines, and a new chapter is only just beginning.

As Royal Bank of Scotland staff made their way into work at offices across the Capital over the last 24 hours, many faced the usual media pack as reporters converged to find out their thoughts on the latest bad news for their employer.

While most either purposefully marched into their office without a word, or delivered the usual well-versed answers – "it's not worth my job to speak to you" – there is a growing feeling of concern in business circles that the demise of RBS has accelerated further.

The victims of that demise will ultimately be the staff themselves, who have already been paying the price for the Sir Fred Goodwin-headed regime's expansionist policy, which steered a once solid business into choppy waters.

Now, as the European Commission punishes the bank for the extent that it has become publicly owned and orders it to sell off major chunks of its business, it is again the staff who will take a hit, as the bank prepares to become a shadow of its former self with even its core domestic banking business lying in tatters.

In total, 318 branches across the UK – 14 per cent of its retail network – will be sold. Much of that will be in England and Wales. In Scotland, the NatWest brand, including its branches on George Street and Bristo Square, will be sold. A number of other businesses, including insurance, are expected to be disposed of over the next four years.

News of the radical changes planned for the RBS operation in the UK came just a day after staff were informed that 3,700 branch posts would be axed as the bank focuses more on internet banking and the installation of modern ATMs which allow customers to conduct their personal banking without assistance.

While RBS has not been willing to detail what the impact of that will be in Scotland, around 17.6 per cent of its branch staff are north of the Border – suggesting there could be a disproportionately large impact of about 650 job losses here.

With 20 branches in the Capital – the same amount as in Glasgow despite being a much smaller city – there is no doubt there will be a severe impact on Edinburgh jobs.

Ron Hewitt, chief executive of the Edinburgh Chamber of Commerce, admitted that there is a new wave of uncertainty as a result of this week's announcements.

He said: "Unfortunately, the big issue here is that this adds further uncertainty to a sector already ravaged by uncertainty. In terms of Edinburgh, it is a major blow as the sector has been doing not too badly and has survived a bit of an onslaught so far. So we hope that the banks will make some sort of statement quickly about where this will impact."

He said that it is the reputation of Edinburgh's financial sector that is at risk as RBS downsizes, with the bank being the last major financial PLC with its HQ in the city. The bank will have four years to complete the sales of the parts of the business identified in yesterday's announcement.

RBS chief executive Stephen Hester admitted that the enforced disposals will impact the potential strength of RBS and lead to "significant uncertainty" for the 6,000 staff and two million customers involved.

There was also concern from investors yesterday, with RBS shares falling more than any other firm in the FTSE 100.

In contrast, Lloyds Banking Group, which also announced measures to satisfy the European Commission that included the sale of the TSB brand, Lloyds TSB Scotland, Cheltenham & Gloucester and Intelligent Finance, saw its share price rise – suggesting the concern is that the state now has too much of a hold on RBS.

Bryan Johnston, a senior divisional director at investment managers Brewin Dolphin in Edinburgh, said: "The disappointing element is the way the Brussels authority have imposed on the company the need to sell off chunks of the business.

"Are they going to have to sell the real engines of revenue and growth and be left with something that will not really be able to get the government off their back?

"It's actually very sad. It is sad that it has come to this state of affairs."

With uncertainty all around, the city's economic development leader, Councillor Tom Buchanan, tabled a motion at a council meeting yesterday confirming that he and council chief executive Tom Aitchison would "maintain dialogue" with RBS directors to ensure the effect of its measures is minimised.

Unions have made it clear that they believe that workers are paying the price of their former bosses' recklessness.

While this week's announcements will lead to understandable alarm, for the staff involved the situation has not changed from a year ago, when the bailout of RBS was first sealed.

They know trouble lies ahead . . . but no-one knows what comes next.