RBS axes 130 jobs from investment banking arm despite coronavirus uncertainty
Royal Bank of Scotland (RBS) has cut its investment banking division down by more than 130 jobs amid coronavirus uncertainty, leaving many – now former – staff with video call-delivered redundancy notices.
Despite rivals such as HSBC delaying similar restructuring projects, sources told the Financial Times that RBS was still pushing on with its shake up of NatWest Markets which was announced in February.With the UK under lockdown until further notice, the job market is facing increasingly bleak repercussions.
Investment bank Nomura has predicted that the unemployment rate will rise to roughly 8% between April and June and rise again to 8.5% in the following three months – higher than the 8.1% unemployment peak following the financial crash.
And according to the University of Cambridge, it’s the under 30s which are getting hit hardest – with 10% of under 30s now unemployed, compared to the 6% of 40-65-year-olds unemployed because of coronavirus.
Trade unions have criticised RBS’ choice to lay off workers amid the crisis. “Our position is quite clear — all these restructures should be paused […] because we don’t know what the lay of the land will be post crisis,” says Unite the Union’s national officer Rob MacGregor, who represents RBS staff.
“For a bank that’s still majority-owned by the British taxpayer, and one that owes the taxpayer more than any other corporate entity in our history, this is not a smart move by the leadership team,” he adds.
The bank previously said it would pause most of its cost-cutting projects but has decided this one couldn’t wait.
The changes are part of new CEO Alison Rose’s vision to hail “a new era” for the bank.
Read more: HSBC delays ‘vast majority’ of redundancies amid COVID-19
When RBS bought NatWest in 2000 for £22 billion, the plan for the next eight years leading up to the 2008 financial crash was aggressive expansion.
Rose plans to further reduce some of the risk the bank’s investment arm holds, aiming to reduce its risk-weighted assets from £38 billion to roughly £20 billion.
Rose says the investment business will become “a much smaller and simpler part of” the bank’s operations.
Some of the remaining jobs, which will be in areas such as risk management, are to be moved to cheaper offices outside the UK.
A spokesperson for NatWest Markets says: “In line with the strategy we announced in February, NatWest Markets is being refocused into a smaller, simpler business focused on the needs of the group’s core corporate and institutional customers.
“Following consultation with employee representatives for NatWest Markets, we are progressing this strategy and providing clarity to those colleagues in roles that do not form part of the business going forward.”
In contrast, HSBC’s CEO Noel Quinn sent a memo to all staff last week saying the bank had decided to “pause, for the time being, the vast majority of redundancies associated with this [restructuring] programme”.
The bank is set to get rid of 35,000 jobs over the next three years, many of which will be through the route of redundancy.
Over in the US, major banks such as Citigroup, Wells Fargo and Morgan Stanley have all suspended job cuts, alongside Germany’s Deutsche Bank, which is also trying to navigate a major internal restructure.
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