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Business

RBS to slash 9,000 jobs within two years

Latest update : 2009-04-07

The Royal Bank of Scotland, saved from bankruptcy after the British government partially nationalised it, announced it would cut around 9,000 jobs in the world, half of them in Britain. The bank hopes to save 2.8 billion euros with the plan.

AFP - Royal Bank of Scotland said Tuesday it would  cut 9,000 jobs over the next two years, half of them in Britain, on the same day the government lifted its stake in the troubled lender.
  
The bank said in a statement it expected to save 2.5 billion pounds (2.8 billion euros, 3.7 billion dollars) through the cuts, which union leaders described as "devastating," in its back office operations.
  
"We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable," said chief executive Stephen Hester. "From this we want the government to be able to realise value from its investment in RBS."
  
"To do so we need to cut our costs, as in all businesses, given the current recession. Unfortunately that means taking difficult decisions about jobs as well as taking many other cost reduction actions."
  
The bank said compulsory redundancies would be a last resort and said the overall impact of the job cuts would be lessened because of natural workforce turnover and a reduction in the number of temporary staff.
  
Even so, union leaders reacted angrily to the news, with Rob MacGregor, national officer of the Unite trade union, saying the union was "appalled that thousands of people, who form the backbone of the RBS operations, are to be made redundant."
  
"These employees are totally blameless for the current position which RBS is in, yet they are paying for the mistakes at the top of the bank."
  
Earlier Tuesday, RBS confirmed that the state had raised its stake in the group to 70.3 percent after investors snubbed a sale of new shares that was backed by the government.
  
RBS, ravaged by the credit crunch and the 2007 takeover of Dutch group ABN Amro at the top of the market, said in a statement that investors bought just 0.7 percent of new shares -- which left the government to pick up the tab.
  
The state acquired a 57.9 percent stake earlier this year after RBS took 20 billion pounds (21.6 billion euros, 28.7 billion dollars) of government funds.
  
In January, the government agreed to convert its preference shares in RBS -- obtained during last year's bailout -- which were worth five billion pounds of normal shares.
  
But existing shareholders were also given the right to buy the shares, which were priced at 31.75 pence per share. The placing was launched on March 16 and closed on Monday.
  
In addition, the government's stake could climb even higher after RBS agreed earlier this year to ring-fence 325 billion pounds of assets into the British government's insurance scheme for toxic assets.
  
The state bailout of RBS, which posted the biggest loss in British corporate history in 2008, has sparked fury in Britain, with ire particularly reserved for former boss Fred Goodwin, who has received a substantial pay-off despite presiding over the bank's struggles.
  
Goodwin, 50, has refused repeated government requests to voluntarily give up part of his pension, insisting that it was properly done and cleared.
  
Anti-capitalism protesters who staged a demonstration in central London on the eve of last week's G20 summit here in London broke into an RBS office and attempted to steal office equipment before being forced out by police.

Date created : 2009-04-07

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