Taxpayer-backed Royal Bank of Scotland today announced around 3,500 job losses over the next three years in a bid to downsize its investment banking arm.
The move at Global Banking and Markets (GBM), which has employees in Stoke, Manchester, Edinburgh and London, follows Government pressure for the 83 per cent state-owned bank to pull back from its ambitions to be a global investment player.
GBM, which employs 18,900 worldwide, deals with a range of financial services such as debt advice, equity trading and mergers and acquisitions.
Its range of work with companies and governments spans from refinancing contracts for Anglian Water, Gatwick Airport and Tesco to debt issues for Finland.
The job losses come amid reports that John Hourican, the head of GBM who will continue to oversee the restructuring of the business, is in line to pick up £4m in long-term incentive shares that he was awarded in 2009.
The latest round of job cuts come on top of 2,000 losses announced by the bank last summer. The new losses will mean nearly 11,000 posts have been cut at GBM from the pre-banking crisis headcount of 24,000.
RBS said the strategy was designed to help move toward the ring-fencing requirements outlined by the Independent Commission on Banking and adopted by the Government last year.
The recommendation called for banks to ring-fence their retail, or high street, operations from their riskier investment banking divisions.
David Fleming, Unite national officer, said RBS’s decision to reduce the headcount at GBM was “staggering”.
“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,” he said.
Meanwhile, the bank said it would restructure GBM and cash management division Global Transaction Services (GTS), by splitting the businesses into two new divisions - Markets and International Banking.
The changes include considering the sale or closure of its cash equities, equity capital markets and mergers and acquisitions businesses, which had income of around £220m in the nine months to September and are currently unprofitable.
The bank also said it was considering the sale of its corporate broking arm, renowned City broker Hoare Govett, which offers independent market advice to 100 listed companies, including 11 of the FTSE 100 index.