Royal Bank to axe 3,000 jobs

THE first wave of mass job cuts hit Scotland's troubled financial sector yesterday, as Royal Bank of Scotland announced 3,000 redundancies worldwide.

It is axing 15 per cent of its global banking and markets workforce in the wake of the credit crunch.

While it is not expected to affect staff in Scotland, insiders said there could be another wave of redundancies in the months ahead – with double that number going – if the credit crisis is prolonged or deepens.

The news came only days after Stephen Hester, the new RBS chief executive, warned of job losses as the bank edged towards the first annual loss in its history.

Last night, an RBS spokesman said the scale of the cuts, and where they would fall, had not been finalised.

"We constantly review our operating model to make sure that it is appropriate to the market condition, and take action accordingly," he said.

The RBS cuts were among thousands announced around the country yesterday.

BT confirmed it was to scrap 10,000 staff, mostly agency and contract workers. Seven thousand of these jobs will be in the UK.

The construction equipment firm JCB announced 398 redundancies – 297 shop-floor and 101 staff posts – blaming "the extreme deterioration in business levels and confidence around the world" for the cuts.

The commercial vehicle maker Leyland plans to cut almost 250 jobs and have an extended Christmas shutdown because of a "severe decline" in demand, it said yesterday.

And the financial services group Friends Provident is to axe 280 jobs. The cuts are expected to be made at its Manchester office.

News of the RBS job cuts will send shockwaves through a banking industry already reeling from the effects of a global financial meltdown, which forced the government to introduce a £500 billion bail-out to save the sector from collapse.

Fears of job losses from the proposed takeover of HBOS by Lloyds TSB are also rife, with the Scottish Parliament this week hearing that as many as 60,000 posts could go across the UK as a result of the deal.

RBS, which employs 170,000 staff around the world – 100,000 of them in the UK and 16,500 in Scotland – is planning a major shake-up, with Mr Hester announcing a review of the business and insisting there were "no sacred cows".

Stuart Davies, an official with the Unite trade union, said: "Unite is very concerned to learn of the possibility of RBS culling 3,000 jobs worldwide.

"The bank must meet the union urgently in order to begin a meaningful consultation on any possible changes. These job losses could have a devastating impact on the RBS workforce worldwide. Unite cannot accept a situation where staff are finding out about job cuts in the media as they head to work."

John McFall, the West Dunbartonshire MP and chairman of the Treasury select committee, urged the bank to approach the cuts on a "global basis". He said: "The headquarters of RBS in Scotland are a symbol of the investment that the company has made in Gogarburn. This must be illustrated by their decision.

"If there had not been a bail-out, the situation could have been an awful lot worse. It's important to focus on every job and to ensure that RBS, and in particular Scotland, remains as a leading financial centre."

It is understood that the RBS job cuts will affect back-, middle- and front-office functions across its 50 locations around the world. However, sources say there has to be extensive consultation with the workforce and other partners before the redundancies are formalised.

Union leaders also expressed shock last night at the scale of the cutbacks at BT and warned they would resist any compulsory redundancies. The company said it had already cut 4,000 jobs, leaving a further 6,000 to go between now and March. This was part of an ongoing efficiency programme that will mainly affect BT's indirect labour force, such as agency workers, contractors and offshore staff, including those based in India.

When asked how long the downturn would last, Ian Livingston, the chief executive, said: "It will get worse before it gets better."

Downing Street insisted that the government was doing "everything it can" to help people who lose their jobs find new ones.

A spokesman said: "Clearly, the Prime Minister has great sympathy with the people who are facing redundancy. It is a traumatic thing for people to be faced with. However, as we made clear yesterday when the unemployment figures came out, there are still considerable opportunities in the economy for people who find themselves redundant. For example, in the last quarter, 260,000 signed on to benefits and 230,000 signed off.

"There are strong indications that employers are still looking to fill around 580,000 vacancies across the country in a range of sectors. We are doing everything we can to help those who become unemployed to get back to work as quickly as possible."

Figures for the three months to September showed 1.82 million people out of work – up 140,000 on the previous quarter and the highest since the end of 1997. The latest job cuts suggest the two-million mark is set to be passed very soon.

IN NUMBERS

170,000
RBS employees globally, including 105,000 in the UK and 16,500 in Scotland.

£691m
Pre-tax loss posted by the bank in August for the first six months of 2008, the second biggest loss in UK banking history.

£20bn
The handout RBS is set to receive from the UK government.

52.6p
The RBS share price at close of trading yesterday, down 6 per cent.

£9.27bn
Current RBS market capital.

£1m
To be spent on RBS staff Christmas parties this year.

31 May, 1727
The date RBS was founded by royal charter in Edinburgh.

10,000
The number of employees at the bank's Direct Line telephone car insurance, which was set up in the 1980s with 63 staff. It now has more than 10,000 staff in call centres in Glasgow, Birmingham, Bristol, Leeds and Manchester.

1.72%
RBS bad debts rose on loans in the nine months to September 2008, compared to 1.47 per cent in June.