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RBS Plans 900 Layoffs as Cost Cutting Initiatives Continue
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The Royal Bank of Scotland Group plc continues with its aggressive cost cutting initiatives as it plans further layoffs. According to a report by Reuters, the Edinburgh-based banking giant is likely to cut another 900 jobs. Notably, with these latest cuts, the total headcount reduction in the last four months comes around 2,700 or 5% of the bank’s workforce in the U.K.
Citing sources familiar with the matter, the report stated that the employees working in several cities in Britain, including London, Edinburgh, Manchester and Birmingham will be affected by the latest layoff. The cuts will mainly affect positions in information technology and back office that support the commercial, retail and private bank.
Amid scaling back operations to focus on retail and commercial banking business in the U.K., the company is likely to announce further job cuts in the upcoming months. In a statement the bank noted, “We understand how difficult this is for our staff and will be offering as much support as we can including redeployment to other roles where possible.” Notably, around 100 jobs are being shifted to India.
The continued downsizing should not come as a surprise to investors as RBS, which was rescued from the onslaughts of the crisis with a £45 billion bailout by the British government in 2008, is striving for growth with several cost reduction initiatives including layoffs and branch closures. The company continues to face revenue pressure amid low, sometimes even negative interest rates and slow growth in economy. Notably, 2015 marked the eighth straight year of annual losses.
While management expects restructuring costs to remain high in 2016, totaling over £1 billion, it is targeting reductions of £800 million in 2016 in adjusted operating expenses.
At a time when the government backed banking giant is burdened with numerous litigations and operational inefficiencies, we remain optimistic about the vast restructuring moves. These moves should not only enhance the company's capital levels but also shift its focus to more profitable markets and pave the way for sustainability and growth in the long run.
Since Monday, major U.K. banking stocks including RBS, HSBC Holdings plc (HSBC - Free Report) , Barclays PLC (BCS - Free Report) and Lloyds Banking Group plc (LYG - Free Report) have rallied higher after polls on the outcome to the Jun 23 referendum which showed that the majority of U.K. voters are in favor of remaining in the European Union.
However, amid global economic concerns and weak financial performance, RBS lost around 19.7% year to date on the NYSE.
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RBS Plans 900 Layoffs as Cost Cutting Initiatives Continue
The Royal Bank of Scotland Group plc continues with its aggressive cost cutting initiatives as it plans further layoffs. According to a report by Reuters, the Edinburgh-based banking giant is likely to cut another 900 jobs. Notably, with these latest cuts, the total headcount reduction in the last four months comes around 2,700 or 5% of the bank’s workforce in the U.K.
Citing sources familiar with the matter, the report stated that the employees working in several cities in Britain, including London, Edinburgh, Manchester and Birmingham will be affected by the latest layoff. The cuts will mainly affect positions in information technology and back office that support the commercial, retail and private bank.
Amid scaling back operations to focus on retail and commercial banking business in the U.K., the company is likely to announce further job cuts in the upcoming months. In a statement the bank noted, “We understand how difficult this is for our staff and will be offering as much support as we can including redeployment to other roles where possible.” Notably, around 100 jobs are being shifted to India.
The continued downsizing should not come as a surprise to investors as RBS, which was rescued from the onslaughts of the crisis with a £45 billion bailout by the British government in 2008, is striving for growth with several cost reduction initiatives including layoffs and branch closures. The company continues to face revenue pressure amid low, sometimes even negative interest rates and slow growth in economy. Notably, 2015 marked the eighth straight year of annual losses.
While management expects restructuring costs to remain high in 2016, totaling over £1 billion, it is targeting reductions of £800 million in 2016 in adjusted operating expenses.
At a time when the government backed banking giant is burdened with numerous litigations and operational inefficiencies, we remain optimistic about the vast restructuring moves. These moves should not only enhance the company's capital levels but also shift its focus to more profitable markets and pave the way for sustainability and growth in the long run.
Since Monday, major U.K. banking stocks including RBS, HSBC Holdings plc (HSBC - Free Report) , Barclays PLC (BCS - Free Report) and Lloyds Banking Group plc (LYG - Free Report) have rallied higher after polls on the outcome to the Jun 23 referendum which showed that the majority of U.K. voters are in favor of remaining in the European Union.
However, amid global economic concerns and weak financial performance, RBS lost around 19.7% year to date on the NYSE.
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RBS currently carries a Zack Rank #4 (Sell).
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