RBS in jobs warning amid £794m loss
The boss of Royal Bank of Scotland has confirmed the jobs axe would swing once again at the part-nationalised bank as it unveiled a half-year loss of £794 million.
Chief executive Stephen Hester said around 2,000 jobs would go at its investment banking arm in the next 12 to 18 months but insisted the bank's recovery was on track.
The 83% state-owned bank was pushed into the red in the six months to June 30 by a £733 million hit on its exposure to Greece's debt-laden economy and an £850 million provision to cover compensation for customers who were mis-sold payment protection insurance (PPI).
The grim results mark the end of a bleak weak for the banking sector after HSBC revealed 30,000 job cuts, Barclays unveiled 3,000 losses and Lloyds Banking Group, which announced 15,000 staff cuts earlier this year, plunged into the red by £3.3 billion.
The job cuts at RBS come as the bank completes the integration of ABN Amro, the doomed Dutch acquisition which pushed RBS to the brink of collapse.
RBS bought ABN Amro before the credit crunch struck in 2007 but the disastrous deal weakened its balance sheet and the Government was forced to pump billions into the bank to keep it afloat.
RBS said it was forced to book a writedown on its Greek government bonds, acquired through the ABN Amro takeover, but said if the proposed restructuring of the country's government debt announced in July is put in place it could claw back £275 million in the second half of 2011.
The bank said its bad debt losses for the first half of the year were down 19% to £4.2 billion. However, these impairment charges increased quarter on quarter to £2.3 billion in the three months to June from £1.9 billion in the previous quarter, driven by deteriorating property values in Ireland.
Speaking to BBC Radio 4, Mr Hester said the bank's restructuring was "going well", and added: "We are getting risk down, the bad assets - that have been dogging us from past years - are coming down and I feel comfortable with the way that part of the RBS plan is unfolding."
He said ongoing problems in world banking created "head winds which will affect us in different ways" including writing down RBS's exposure to Greek debt.