Royal Bank of Scotland has slashed almost 1,600 jobs in the past four weeks as part of a major drive to cut costs and restructure the lossmaking bank.
The state-backed lender is axing 448 UK roles in its investment banking arm as it shrinks the division, the FT revealed on Tuesday. RBS is also planning to transfer millions of pounds of pension-related costs on to employees, according to people familiar with the situation.
The latest job cuts to RBS’s 64,100-strong UK workforce mainly affect back-office and middle-office positions within the investment bank, including support and technology services for frontline staff.
RBS is setting up 300 similar, but lower cost, roles in India, joining its existing operations in the country. It is understood that the lender will reduce these roles over time as the investment bank shrinks.
The reductions come days after the bank confirmed it had abolished 550 adviser jobs as it scales back its investment advice service to customers that have a minimum of £250,000.
Last month, it announced that 400 roles would be cut from its business banking arm, and 200 from its commercial banking team.
RBS said: “As part of RBS’s drive to be a stronger, simpler and fairer bank, we have been restructuring our Corporate & Institutional Bank, as well as reducing its size, to focus on our core customers and products.
“As this process continues, our frontline staff need a simpler, clearer, more efficient relationship with our middle and back-office functions to better serve customers, so we’re reshaping our services business accordingly.”
The bank said that it was attempting to “redeploy staff into new roles wherever possible”.
John Morgan-Evans, an officer at trade union Unite said the group was “disappointed that despite RBS’s promise to build a UK-focused bank, we continue to see jobs shipped out of the UK”.
“It was inevitable that RBS’s talk of ‘technology simplification’ would come down to yet more job cuts as that remains the bank’s go-to solution, whatever the problem.”
The latest phase of RBS’s restructuring follows eight successive years of net annual losses, which have amounted to more than £50bn since the financial crisis.
In the bank’s annual earnings statement last month, chief executive Ross McEwan warned that a further £800m of cost savings would be made in 2016.
Mark Garnier, a conservative MP and member of the Treasury committee, said: “RBS is a taxpayer-backed asset and it is important we make the most of it, and get it back into the private sector with the biggest return we can achieve, even if it means tough decisions and job cuts.”
RBS is planning to pass about £18m in extra annual pension costs to its 27,000 defined benefit pension scheme members, according to people close to the situation.
The government is abolishing the second state pension from April, which means some companies with certain defined benefit scheme arrangements will have to pay an increase in national insurance costs.
Number of RBS staff in the UK
RBS is aiming to pass on this increase to its defined benefit scheme members, which is expected to amount to 2 per cent of an employee’s salary a year. RBS declined to comment.
Earlier this year the bank made pension scheme changes to help plug its deficit, which involved accelerating a £4.2bn payment to its defined benefit scheme. The payment resulted in a £1.6bn hit to its capital reserves.
RBS was also forced to set aside a further £2bn in the last quarter of 2015 to cover potential payouts related to mis-selling of financial products.
This included £1.5bn to help cover a settlement with the US Federal Housing Finance Agency over alleged mis-selling of mortgage-backed securities and a further £500m to cover potential payment protection insurance compensation.
Get alerts on UK companies when a new story is published