RBS job cuts: Bank admits staff losses are 'inevitable'

Published on Monday 28 April 2008 13:50

ROYAL Bank of Scotland today indicated it could step up planned job cuts following last year's joint takeover of investment bank ABN Amro.

The company said staff reductions after the ABN Amro acquisition were inevitable, but warned it was also "looking at the appropriate size" of its businesses in light of the current financial turbulence.

The update came as the Financial Times said the NatWest owner would slash its combined 28,000-strong global markets division workforce by 25% after the 71-billion euro (56bn) RBS-led takeover of ABN last October.

But RBS is thought to be under pressure to reduce its headcount as the credit crisis continues to hit the business.

Last week RBS announced further credit-crunch related losses as it unveiled plans for a 12 billion rights issue to shore up its balance sheet.

Today's news suggests that other areas of the business may also be affected, although the group declined to confirm numbers.

It is also unclear how many of the bank's 100,000 UK staff will be affected, but reports suggest that ABN's operations in the Netherlands may bear the brunt of the merger redundancies.

RBS said today: "Since the acquisition of ABN AMRO we have consistently said that as we brought our two wholesale banking businesses together there would be job losses over the course of the next two years. This is unfortunate, but inevitable.

"In light of current conditions in some parts of the global credit markets we are also looking at the appropriate size for our businesses affected by this downturn."

The group added: "We committed to and have engaged in regular dialogue with our staff and their representative bodies throughout integration and this commitment still stands. We will provide all of the appropriate support and guidance throughout."

RBS last week unveiled a further 5.9 billion of investment write-downs from risky US property-related assets.

It is one of the worst affected by credit squeeze-related write-downs in the UK, having now taken a 8.4 billion hit in total.

The group has come under fire over its plans to call on shareholders to boost its capital funds after boss Sir Fred Goodwin less than two months previously pronounced the bank's capital satisfactory.

Investors are also becoming anxious over the benefits of the ABN deal, which is largely said to be behind the group's need to tap investors for cash.

But RBS is among a swathe of banks cutting jobs as financial groups scale back following hefty credit crunch-related losses.

Citigroup announced plans to cut 9,000 jobs just over a week ago, while Merrill Lynch said it was to axe 4,000 staff in a bid to save hundreds of millions of dollars a year.