Royal Bank of Scotland (RBS) is mulling over more job cuts, the bank’s chief executive reveals in a conference.
Stephen Hester stated during the Bank of America Merrill Lynch Banking & Insurance CEO Conference, his bank will more likely increase job-shedding, as economic conditions are not improving. Moreover, its exposure to Greek debt further depressed investment and customer activity, plummeted share prices, raised the threat of a double-dip recession, and caused lower interest rates to stay at a longer span of time.
He also said that gap between lending and deposit rates, including net interest margins, would be impacted; leading to an increased examination of the firm’s cost base and loan impairment trends.
He added that worries about bank and sovereign credit have affected funding markets, swelling wholesale funding costs and generating skepticism about demand for quantitative easing.
Mr. Hester said his bank is centralizing costs and is “actively working on further cost initiatives given the economic outlook.” He emphasized investment banking as a section where cost cutting would be pressured.
The bank’s boss’ comments followed Lloyds Banking Group chief Antonio Horta-Osorio’s announcement to cut costs by £1.5 billion by 2014.
This will see job costs amounting to 15,000 among Bank of Scotland, and Scottish Widows ahead of the 28,000 the bank has already made by joined Lloyds TSB and HBOS.
The RBS chief told the conference that the Independent Commission on Banking (ICB)’s scheme to separate the retail and investment banking arm were “at the tough end of market expectations”, and the delay of implementation to 2018 will give ample time for the bank to adjust.