ROYAL Bank of Scotland (RBS) yesterday dropped a bombshell on workers by announcing it will axe 3,700 jobs across its retail branch network, as the Treasury and the European Commission today prepare to list a raft of assets the bank will be forced to sell off as part of a restructuring agreement.
The beleaguered bank said the job cuts form part of its ongoing investment for the future and insisted the decision was completely independent of its negotiations with Brussels.
The news comes as RBS and fellow part-nationalised bank Lloyds Banking Group prepare to raise some £54bn in fresh funds, including:
•Lloyds raising £13.5bn in a rights issue – including £5.9bn of new shares bought by the Treasury;
•Lloyds issuing £7.5bn in innovative bonds;
•The Treasury pumping £25bn of fresh cash into RBS;
•The Treasury setting aside an £8bn contingency fund to rescue RBS in the event of another financial crisis.
In total the government will set aside up to £38bn of state funds to strengthen both banks.
Meanwhile, EU competition commissioner Neelie Kroes has decided to put RBS’s commodity trading joint venture RBS Sempra on the block to increase competition in the sector, as a penalty for accepting state aid during the financial crisis. RBS paid $1.35bn (£825m) to Sempra Energy for a 51 per cent stake in the business in 2007.
Other assets which the bank could be forced to sell include: 312 of its branches in England and NatWest branches in Scotland, which will be rebranded as Williams and Glyn; the lucrative RBS Insurance arm, including the Churchill, Green Flag and Direct Line brands; and its US retail arm Citizen Bank, a key asset for chief executive Stephen Hester.
An EU decision on the extent of the break-up of RBS and Lloyds is expected this morning, to coincide with an announcement from the Treasury on participation in its asset protection scheme (APS).
RBS is expected to confirm it will pump £270bn into the toxic loan insurance programme, for which it will pay annually under a “pay-as-you-go” arrangement with the Treasury instead of stumping up a hefty upfront fee as originally agreed.
The revelation of job losses at RBS yesterday caused fury among unions, with Unite national officer Rob MacGregor claiming the plans were “absolute madness”.