Royal Bank of Scotland plans to to cut 2,600 insurance and retail banking jobs over the next year.
UK taxpayers own a 70 per cent stake in the loss-making bank, which employs about 150,000 people and is in the midst of a restructuring plan.
The job losses will be concentrated in the group’s insurance division, where 2,000 positions out of 16,777 will be eliminated as RBS cuts losses in preparation for an eventual sale.
Competition regulators in Brussels insisted that the bank divest itself of its Direct Line and Churchill insurance businesses as well as more than 300 branches as a concession for EU approval of RBS’s state aid package.
An initial public offering is currently considered the most likely route for the insurance disposal.
The other 600 job cuts will be concentrated at RBS’s head offices in Edinburgh and London. They reflect both company-wide cost cutting and reduced need for head office staff after the EU-mandated sale of 318 branches, or roughly 15 per cent of the total.
RBS has previously announced the elimination of roughly 20,000 positions as it seeks to claw its way back to profit after the ravages of the financial crisis and the disastrous acquisition of ABN Amro.
The bank hopes to use attrition and voluntary redundancies to eliminate most of the necessary positions. Previous cost-cutting rounds have resulted in fewer than one in four positions being eliminated through compulsory redundancy.
An RBS spokesman said: “We are working hard to rebuild RBS in order to repay taxpayers for their support and having to cut jobs is the most difficult part of this process. We have strived at all times to be open and honest about the tough choices we are making. We will do all we can to support our staff through this process and do everything possible to keep compulsory redundancy to an absolute minimum.”
Last week, chief executive Stephen Hester warned that market volatility could make it harder for the bank to return to profit. RBS recorded a £248m net attributable loss in the first quarter, but stripping out restructuring costs, the one-time bonus tax and other one-off charges, it made an underlying operating profit of £713m.