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November 14, 2008

RBS to cut global workforce by 3,000

by Gill Montia

Story link: RBS to cut global workforce by 3,000

Royal Bank of Scotland (RBS) is poised to cut around 3,000 jobs from its Global Markets investment banking division, in the coming month.

RBS has a presence in over 50 countries and employs around 170,000 people worldwide, approximately 100,000 of whom are located in the UK.

Some redundancies are expected at its City of London headquarters, however, employees at High Street branches of RBS and its subsidiary, NatWest, are thought to be off-limits.

The group raised £12 billion in the summer, in what was the biggest corporate fundraising ever seen in the UK.

It has been heavily criticised for the level of its exposure to the US sub-prime mortgage market and on the eve of the credit crisis further stretched its balance sheet with the acquisition of part of the Dutch bank, ABN Amro, at what many analysts believed to be an inflated price.

Having posted a loss of £691 million in the six months to the end of June, the bank is expected to end 2008 in the red and record its first ever full-year loss.

Its survival plan includes a £5 billion investment from the Government, in the form of preference shares, which could possibly extend to £20 billion of government support if investors show no interest in a proposed £15 billion rights issue.

It is unlikely that shareholder take up will be significant and this could leave the Government owning up to 60% of the business.

 

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