Credit crunch claims first Scots jobs

THE fallout from the credit crunch reached Scotland's financial services industry last night as two major players announced substantial job losses.

HBOS is to cut about 90 jobs in its corporate-banking operation, and Aberdeen Asset Management, one of Scotland's largest asset managers, said it would also cut staff.

Last night there were fears that the moves were the start of a series of cuts that could lead to as many as 5,000 financial services jobs being lost in Scotland.

Staff at Bank of Scotland Corporate, part of HBOS, were called in by managers yesterday morning to be told they were being made redundant.

Although some could be redeployed it is thought that most of the total of 92 people affected, including some at director level, will lose their jobs.

About half of the posts being lost are in Edinburgh, where the bank has its headquarters. Most of the rest are in London.

The job losses will be in three teams within corporate banking – joint ventures; specialised industries finance; and integrated, structured and acquisition finance.

Staff at the bank were taken aback by the move, which came just weeks after Peter Cummings, the chief executive of Bank of Scotland Corporate, assured them the company was well placed to withstand the credit crunch.

According to HBOS – which recently asked shareholders for £4 billion in a rights issue – senior managers took the decisions. However, Cummings is understood to have been involved in the process.

A statement from HBOS said: "Bank of Scotland Corporate constantly reviews its operations to ensure that it has the right level of staff to meet the needs of the business.

"We have decided to potentially reduce staffing levels by around 90 posts in various locations across the UK.

"The relevant teams have seen significant growth in recent years and currently employ around 1,000 people in total."

The HBOS move came as Aberdeen Asset Management announced plans to reduce staff costs across the company by at least £15 million.

Finance director Bill Rattray said the cuts, which would be made mainly from natural wastage rather than redundancies, were a "natural part of the cycle".

Rattray told The Scotsman: "During the good times, asset managers typically build up a little bit of fat in their cost base.

"We're addressing that a bit more aggressively during more difficult times."

He would not discuss the anticipated reduction in jobs at the Aberdeen-headquartered group, but said the losses were likely to be mainly lower-level positions rather than fund managers.

The moves by the two companies are the first significant public sign that the Scottish financial sector will be affected by the credit crunch.

Last month Douglas Adams, an economist at the Ernst & Young Scottish Item Club, predicted that financial services firms in Scotland could lay off up to 5,000 workers over the next two years.

Paul Clarke, editor of eFinancial Careers Scotland, said: "I'd personally be feeling a bit scared if I were working for HBOS.

"One week they are saying their balance looks fine, the next minute they need £4bn to shore up the books.

"You'd have thought, 'Is that the end of their problems and will they be letting more people go?' "