Royal Bank cancels Christmas – or at least subsidising staff parties

Royal Bank of Scotland is to stop subsidising Christmas parties for its investment bankers as part of swingeing new cost cuts.

The bank, which is 83 per cent owned by the UK taxpayer, has banned subsidised staff entertainment for the rest of the year.

It has also stopped purchases of new BlackBerry mobile phones and other telecoms equipment.

Staff were told of the move in an e-mail from Chris Kyle, chief financial officer of RBS’s investment bank.

He wrote: “As we head into the last quarter [of 2011], there is a current need to further tighten and minimise the rate of spend on non-staff costs.”

Mr Kyle said all international travel for internal purposes would stop.

He also ordered all travel of under four hours duration to be in economy class. Mr Kyle told staff there would be a freeze on hardware and software spend and all contractors would have to take a compulsory two-week holiday over Christmas.

There will also be no new newspaper or magazine subscriptions.

Investment banks have slashed costs this year as income has dried up, resulting in big job cuts and even minor expenses coming under fire.

The squeeze has intensified after a weak third quarter of the year.

Barclays Capital this month outlined a range of savings initiatives, including cutting back on business travel and stricter rules on the use of taxis.

Last year, RBS said it would be making only modest contributions to the cost of Christmas parties.

A survey of some of Scotland’s biggest employers last November also found that lavish parties were a thing of the past.

Organisations including Standard Life, Aegon, Scottish Enterprise and Northern Rock said there would be no funding for Christmas parties last year.

They said individual departments could still organise Christmas functions, so long as staff were willing to fork out themselves.

Scotland’s major councils followed a similar pattern.