The Royal Bank of Scotland is to cut 1,400 jobs – about half of them at its Scottish headquarters in Edinburgh – in the latest round of redundancies since it was bailed out by the taxpayer.
The Edinburgh-based banking giant said the positions will be axed over the next two years as part of plans to restructure its retail head office functions. It insisted that “customer-facing” staff, for example those working in branches, would not be affected.
It is expected that about a fifth of the 3,500 staff at Gogarburn, RBS’s sprawling headquarters on the outskirts of the Scottish capital, will go over the next 24 months.
Unions have described the move as “brutal and irresponsible” and highlighted that RBS had returned to profit in recent months, making £826 million in the first quarter of this year.
Unite – which described staff morale as “terrible” – has insisted there was no longer a business case “for cutting jobs so drastically”.
More than 50 per cent of the staff affected in the latest round of cuts are based in Edinburgh and the majority of the remainder in London, with some in smaller centres such as Birmingham, Manchester and Bristol.
About 700 staff across the country were being told that their jobs were under immediate threat, in the first phase of the cuts.
The changes affect support staff in the retail arm including those working in communications, marketing and customer analytics and risk departments.
RBS says it is refocusing resources on branch refurbishments and investment in mobile and online services.
Ross McEwan, chief executive of the RBS UK retail arm, said: “To serve our customers well we have to ensure that our resources are focused on the things that matter most to them.
“That is why we are investing £700m in the next three years in new and improving services.
“Regrettably, we can only do that by restructuring the way we work in head office so that every effort is concentrated on supporting our customers and the frontline staff that serve them.
“This is clearly difficult news for our staff and we will do everything we can to support them, including seeking redeployment opportunities wherever possible to ensure compulsory redundancies are a last resort.”
Unions, however, said that both customers and staff would suffer from the move. “For some of these staff, this is the third time they have been up for redundancy”, Dominic Hook, national officer for Unite, told The Scotsman.
“If you can imagine to have survived the first round but you’re still doing all the work of those who have left and now you are looking over your shoulder again.
“Morale is terrible as a consequence and while each time RBS have told to us they now have the right structures in place, yet again we see more job cuts.
“Now the bank has returned to profit, we want them to stop cutting positions and concentrate on being the sort of bank society needs.”
Unite said two departments providing support to frontline staff were being cut by 80 per cent.
The bank, which is 81 per cent owned by the nation, has already slashed about 37,500 positions since it was rescued at the height of the financial crisis. It was bailed out by the UK government in October 2008 at a cost of £45.5bn in direct taxpayer support and hundreds of billions more in government-backed insurance and loans guarantees.
A RBS spokeswoman added: “We’ll be looking at a range of measures including redeployment and voluntary redundancies for affected staff. Compulsory redundancies will be kept to an absolute minimum.”
Chairman Sir Philip Hampton warned earlier this week at the company’s annual meeting that changes were needed to put the business “in the right shape” which could mean “further impacts on employees”.
John Swinney, Scotland’s finance secretary, said: “This is disappointing news for those involved and will be a deeply worrying time for those staff affected and their families.
“The Scottish Government will do everything we can to provide support and help to those affected by job losses in Scotland through the Finance Sector Jobs Taskforce and our Partnership Action for Continuing Employment (Pace).
“The Finance Sector Jobs Taskforce has a track record of support for those who want to continue their career in the financial services sector, matching their skills with the needs of other firms in the city. The most recent Pace follow-up survey found that 74 per cent were securing work post-redundancy.”
“Both Pace and the Taskforce have been in contact with RBS and stand ready to provide any assistance they can to minimise the impact on affected staff.”
Mr Swinney added that it was some consolation that RBS is investing £175m in facilities over the next three years.
“The confirmation that RBS will be reinvesting in Edinburgh as a vital centre for retail banking, including through their innovation centre and updated IT systems, is a welcome commitment to Scotland,” he said.
“This £175m investment in Scotland will significantly enhance our position as one of the main IT hubs for the global RBS group and make Scotland the bank’s global centre for mobile banking and its global payments hub.”
Due to the size of the workforce, Gogarburn has one of 16 stops on the Edinburgh trams project and it is not immediately clear what impact a 20 per cent reduction in staff numbers would have.
The bank has faced anger over £607m bonuses for executives amid annual losses of £5.2bn, though it recently swung back into the black. It has been dogged by a succession of problems including a £390 million settlement for rate-fixing, a £1.1 billion provision for mis-selling and a £175 million IT fiasco.
The announcement comes in the wake of a number of other banks slashing UK staff. Unite said that, since the beginning of the year, RBS, HSBC, Barclays and Lloyds have announced plans to slash about 6,900 jobs.