Labour attacks Osborne over RBS dealings

LABOUR yesterday accused  George Osborne of adopting a “shambolic and uncertain approach” to the management of RBS following the resignation of Stephen Hester.

Shadow financial secretary Chris Leslie raised concerns that the chancellor played a central role in Hester’s departure and accused him of rushing to privatise the bank before the next general election.

In response Treasury minister Sajid Javid insisted Osborne had “not been directly involved” in the decision to remove Hester. Javid also said the bank should now focus on boosting the real economy, hinting at measures due to be announced in next Wednesday’s mansion house speech.

Meanwhile finance director Bruce van Saun detailed further cuts to RBS’ investment banking arm, a move backed by George Osborne but thought to be opposed by Hester.

Another 2,000 jobs are going in the markets division, while van Saun wants to bring costs down from around £3bn per year to £2bn per year.

The bank will exit structured retail investor products and equity derivatives, as well as peripheral market-making activity. That will see cuts in currency products, particularly in less well-used currencies, and an end to market-making activities. The move will free up capital which can be reallocated to boost UK retail lending.