Broken ‘covenant’

At the height of the financial crisis, the Royal Bank of Scotland came under the auspices of taxpayers and received a bailout of ÂŁ45bn.

 
Since then, the bank’s implicit covenant with taxpayers has time and again been broken.

 
The bank has posted massive losses each year for nearly a decade, totalling £50bn over the last eight years – a figure that ITV business editor Joel Hills called “so large it’s almost meaningless.”

 
Much of these losses came from having to pay out billions in compensation for mis-sold Payment Protection Insurance (PPI) and legal bills for other misdeeds.

 
RBS has haemorrhaged jobs since its bailout, too, with 30,000 people being made redundant since 2008 – that’s nearly a third of its once 160,000-strong workforce over the last eight years.

 
The bank announced its latest raft of job losses yesterday (March 15), with nearly 450 investment banking jobs set to go, two-thirds of which will be shipped off to India, with some jobs being outsourced to Poland as well. These jobs serve back office functions and include a variety of roles such as in IT and processing.

 
Only days before, RBS announced more than 500 investment advisers would lose their jobs to a faceless online and telephone-only service.

 
The bank justified its latest jobs cull by arguing that “frontline staff need a simpler, clearer, more efficient relationship with our middle – and back-office functions to better serve customers, so we’re reshaping our services business accordingly.”

 
RBS also highlighted that the cuts were part of its aim to reduce the size of its investment banking arm.

 
‘Disingenuous’
But Unite regional officer John Morgan-Evans said this reasoning was disingenuous.

 
“Their motivations are nothing more than a vicious cost-cutting exercise,” he said. “RBS has a history of outsourcing roles and this most recent jobs slash is the latest chapter in this history.

 
“Unite is disappointed that despite RBS’s promise to build a UK-focused bank, we continue to see jobs shipped out of the UK,” he added. “It was inevitable that RBS’s talk of ‘technology simplification’ would come down to yet more job cuts as that remains the bank’s go-to solution whatever the problem.

 
“Once again placating shareholders with short-term savings is being prioritised over the long-term future of the bank and the employees who keep RBS running.”

 
Morgan-Evans argued that because the British public owns 73 per cent of the bank, RBS should have a distinctly social focus.

 
“These job cuts are being driven by a CEO obsessed with paying out dividends to shareholders as soon as possible. Outsourcing is one very easy way to cut costs quickly,” he said. “But these short-term measures will mean that staff, customers and the larger British public will end up paying the price.”

 
Again turning its back on the social role it should play as a publically owned bank, RBS has shut hundreds of bank branches in another bid to cut costs over the last several years – it now has only 1,600 branches of the 2,100 it had in 2010. Analysts expect the bank to shut hundreds more branches in the coming years.

 
In fact, RBS broke an explicit promise it made in 2010 to not to close branches that were the last in town – last year alone, RBS left nearly 200 towns without a local branch.

 
Hefty ÂŁ3.8m pay deal
RBS’ current financial woes have not trickled down to the bank’s top management – CEO Ross McEwan was awarded a hefty £3.8m pay deal, just as the bank reported £2bn in losses for 2015. This is the highest pay award for the chief executive of a bank since 2008.

 
What’s more, 121 employees at the bank earn in excess of €1m (£790,000) each year. And only last week, RBS announced it would give its top management team future bonuses in shares worth £17.4m.

 
The bank’s alarmingly weak performance has snuffed out any plans for the government to continue its fire sale of RBS anytime soon. Last year, the government sold 5 per cent of its stake at an astounding loss to the taxpayer of £1bn – and last week MPs demanded a review into the botched decision.

 
Now, RBS shares are trading at only 234p a share – less than half of the 500p per share price that the UK taxpayer doled out in 2008.

 
Unite has long argued that RBS should remain in public hands.

 
“It is clearly absurd that the same chancellor who was prepared to attack tax credits in an attempt to save £4bn is willing to squander up to £13bn by selling off RBS at mates rates to the City,” said Unite national officer Rob MacGregor last year as MPs debated the bank’s remaining public stake following the initial fire sale.

 
“MPs must remember that RBS was taken into public ownership to prevent a total meltdown of the banking system,” he added. “The public’s stake in one of Britain’s biggest banks presented us with a once in a generation opportunity to clean up the banking system, bring much needed scrutiny to the boardrooms and restore trust in the banks we all rely on.”