RBS to Cut 1,400 Jobs as Restructuring Continues
The Royal Bank of Scotland (RBS) said it would cut 1,400 jobs over the next two years as it continues to restructure its operations.
The Edinburgh-based bank, which was bailout out by the British government at the height of the financial crisis, said the redundancies would be from its head office.
"To serve our customers well we have to ensure that our resources are focused on the things that matter most to them. That is why we are investing £175 million ($266 billion) in Scotland over the next three years in new and improving services," said the CEO of RBS' U.K. retail business, Ross McEwan, in a press release.
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"Regrettably, we can only do that by restructuring the way we work in head office, so that every effort is concentrated on supporting our customers and the frontline staff that serve them. This is clearly difficult news for our staff and we will do everything we can to support them, including seeking redeployment opportunities wherever possible, to ensure compulsory redundancies are a last resort."
The bank's share price was up 3.35 percent in afternoon trading after the announcement, which surprised Ian Gordon, a banking analyst with Investec.
"The announcement probably provided some marginal boost to sentiment today, but in the general scheme of things I do not regard the job cuts as surprising," Gordon told CNBC.
"Possibly the only positive story to come out of the bank in its first quarter results was that management was expecting costs to come in lower - so we were expecting some cuts. As such, the rise in share price has left me slightly bemused."
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The bank's first-quarter results, published earlier this month, showed the 81 percent state-owned bank had returned to profit.
RBS said it made 826 million pound ($1.26 billion) in the three months to March, and that it expected to complete most of its restructuring during 2014.
Britain's biggest trade union, Unite, criticized the upcoming RBS cuts, saying the job losses will have a negative impact on the local economy and customer service.
"This is brutal and irresponsible behaviour from RBS, which is almost entirely owned by the taxpayer. It is high time that the banks took its social responsibilities seriously," said Dominic Hook, Unite's national officer for finance and legal.
News of the redundancies came a day after official figures showed that although the number of Britons claiming unemployment benefit fell last month, the number of people without a job grew by 15,000 to 2.518 million in the first quarter.
(Read More: UK Banks Return to Favor in Turnaround Year)
- By CNBC's Katrina Bishop, follow her on Twitter @KatrinaBishop