Job cuts to come from sale of RBS insurance arm and 318 bank branches – a condition of EU's £54bn taxpayer support
Jill Treanor
Royal Bank of Scotland blamed EU regulators today as it revealed it was axing 2,600 jobs from its insurance and retail business – taking the job toll since the October 2008 bailout to 22,600.
Unions estimated that 500 of the jobs being lost will be outsourced to India as the Edinburgh-based bank primes its insurance arm for a stock market flotation to appease the EU.
Europe demanded that RBS sell off the insurance arm – which includes Direct Line, Churchill and Green Flag – and 318 of its bank branches, in return for up to £54bn of taxpayer support, regarded as state aid by Europe.
The insurance business had originally been put up for sale in 2008 by former chief executive Sir Fred Goodwin in his haste to raise funds to save the bank from collapse, but that was reversed by the new chief executive Stephen Hester, who has lamented the conditions being imposed by the EU on the bank.
"This is not a business we wanted to sell. It is a very good business, but in order to get it ready for sale we have to get costs down," a RBS spokesman said.
The bank has warned 2,000 of the 16,000 employees of its insurance arm that their jobs will now be lost, while some 600 staff who work in the retail head offices split between Edinburgh and London – about a quarter of the division – will also lose their jobs, partly as a result of the sale of part of the branch network.
Rob MacGregor, Unite national officer for finance, said: "Taken together, this is a devastating blow for a dedicated workforce which has worked very hard to turn around the fortunes of RBS following some disastrous decisions by the previous management".
He said the union was "fundamentally opposed to offshoring" as well compulsory redundancies, which the bank said it would try to keep to a minimum.
A RBS spokesperson 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. The job losses we've announced to date have resulted in fewer than one in four people being made compulsorily redundant".
Hester has admitted that RBS is most likely to embark on a stock market flotation of the insurance business by 2012, but has already kick-started the process of selling off the bank branches. While there were originally five expressions of interest for the branches, now there are just three suitors still being considered – Spanish banks Santander and BBVA, and National Australia Bank.
Virgin Money, part of Sir Richard Branson's empire, had hoped to be able to hoover up the branches to expand on the high street but has been rejected by RBS advisers UBS for tabling too low an offer. Virgin will now press on with its plans to open 70 branches without an acquisition.
The EU is also demanding that Lloyds Banking Group, in which the taxpayer has a 41% stake, sell off 600 branches in return for almost £20bn of government support. Lloyds has four years to complete the sale of its Cheltenham & Gloucester branches along with the TSB brand and telephone bank Intelligent Finance.
Even so, finance union Unite has warned that up to 25,000 jobs in the RBS and Lloyds branch networks are at risk because of the demands of the EU.
The Guardian
