SALON

Thursday, Jan 12, 2012 11:54 AM UTC

RBS To Cut 3,500 Jobs In Investment Banking

By

Topics: From the Wires,

LONDON (AP) — Taxpayer-backed Royal Bank of Scotland announced Thursday it would cut 3,500 jobs, part of a reorganization of its investment banking arm as it reins in its ambitions to be a global financial player.

The cuts, which are to be phased in over three years, will largely affect employees in Global Banking and Markets, which had offered advice on mergers and acquisitions. The division has 18,900 employees overall.

“Our goal from these changes is to be more focused for customers, more conservatively funded, more efficient and with better, more stable returns for shareholders overall,” Chief Executive Stephen Hester said in a statement.

The bank has been under pressure to pull back from its expansion goals. The strategy also dovetails with British government efforts to force banks to separate their retail operations from their more volatile investment banking.

Under former chief Fred Goodwin, RBS led a takeover of Dutch bank ABN Amro in 2007, only to run into huge problems in 2008, when the global financial crisis caused a severe credit crunch. The group collapsed in 2008 and taxpayers had to bail it out. It is now 83 percent owned by the taxpayer.

Write-offs on the ABN deal helped swell the bank’s losses in 2008 to 24.3 billion pounds, a U.K. record.

The monumental losses put Goodwin — nicknamed “Fred the Shred” for his vigorous cost-cutting at RBS — under intense scrutiny. He left RBS with a pension of 703,000 pounds ($1.1 million) per year after leading the expansion spree, though he later negotiated an agreement to take a lump sum payment of 2.8 million and scaled back his pension payments.

The latest cuts are in addition to the 2,000 losses announced by the bank last summer. The fresh losses mean 11,000 posts have been cut at the division from the pre-banking crisis headcount of 24,000. RBS said it will now exit from the mergers and acquisitions.

“This strategy has succeeded in making RBS stronger and placing us on the road to long-term success,” Hester said.

The job losses come amid reports that John Hourican, who will continue to oversee the restructuring of the business, is in line to pick up 4 million pounds ($6.1 million) in long-term incentive shares awarded in 2009.

Union representatives sharply criticized the cuts.

“It is a disgrace that while on a daily basis stories are emerging about the massive bonuses at the top of the bank, increasing numbers of jobs are being cut from amongst the hard-working staff,” said David Fleming, a Unite national officer.

More Danica Kirka.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments are not enabled for this story.

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
FBI reportedly joins Bachmann campaign finance probe
149 points150 points | 4 comments
vote
Jon Karl makes things worse: He regrets “inaccurate” Benghazi email but says his story based on it “still entirely stands.” Really. ABC News?
118 points119 points | 22 comments
vote
“Jodorowsky’s Dune”: The sci-fi classic that never was.
57 points58 points | 14 comments
vote
Doug Henwood: Capitalism Thrives on Class Exploitation
46 points47 points | 4 comments
vote
Paul Krugman’s right: Austerity kills. "In an economy where we’re all in the same boat, one person’s spending is another person’s income. So when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy."
50 points51 points | 20 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations