RBS May Cut 2,600 Jobs in Insurance, Consumer Bank

By Gavin Finch and Kitty Donaldson Businessweek

May 10 (Bloomberg) -- Royal Bank of Scotland Group Plc, Britain’s biggest government-owned bank, plans to cut 2,600 jobs at its insurance and consumer banking divisions, according to a person with knowledge of the plan.

The lender may eliminate 2,000 employees at its insurance division, which includes Direct Line and Churchill, and a further 600 jobs at its consumer banking head offices in the U.K., said the person, who declined to be identified because the talks are private.

RBS cut about 26,000 jobs, or 12 percent of its staff, between 2008 and yesterday, according to Bloomberg data. The bank is being forced by the European Union to sell its insurance units, along with more than 300 bank branches, as a result of the government assistance.

“It is deeply disappointing to be facing further Scottish job losses on this,” Scottish Finance Secretary John Swinney said in a statement. “We are currently anticipating a total job loss of as much as 500 Scottish posts in Edinburgh and Glasgow.”

RBS, recipient of the world’s largest bank bailout, climbed 14 percent to 51.75 pence, giving the bank a market value of 30 billion pounds. The shares have gained 77 percent this year.

RBS is the only U.K. bank not to have posted a profit for the first quarter of this year. The lender lost a total of about 28 billion pounds in the past two years, following its acquisition of ABN Amro Holding NV.

RBS’s insurance unit posted a 50 million-pound loss from a profit of 76 million pounds a year earlier, the bank said when announcing first-quarter results last week.

“We are working hard to rebuild RBS in order to repay taxpayers for their support and having to cut jobs is the most difficult part of this process,” the Edinburgh-based bank said in an e-mailed statement. “We have strived at all times to be open and honest about the tough choices we are making.”