New RBS chief sharpens axe

As the gloom surrounding Royal Bank of Scotland deepens, new chief exec Stephen Hester's admission that the bank would have to "cut our cloth" has sparked fears that thousands of job cuts could be on the cards.

Hester, who has joined the bank on a salary of 1.2m, has promised to cut costs, and the bank's new strategic review is looking to focus on areas where it has a competitive advantage and reduce its exposure to riskier businesses.

RBS is heading for its first annual loss in its illustrious history, and plans to raise 20bn of extra capital - 15bn from no-doubt-disgruntled shareholders and 5bn from the government.

The bank employs 170,000 people globally, 100,000 of them in the UK as a whole and 16,500 in Scotland. Hester says there will be no "sacred cows", and any underperforming divisions are likely to either be sold or cut down.

He said: "There will, of course, be a number of our businesses where customer volumes are less than they were before and, of course, we need to adjust to that, and that will mean, in some instances, cost cuts and job cuts."

The good news for employees north of the border is that, firstly, the headquarters will be staying in Scotland, and secondly, areas like retail banking (which is big here) look relatively secure.

The largest cuts are likely to occur in areas like the wholesale global banking and markets divisions, where "market dislocation reduced income by approximately 1bn", according to analysts. These are obviously run primarily outside of Scotland.

However, this doesn't mean any jobs are entirely safe, and RBS is likely to at least trim more or less every division, in the face of turbulent market conditions. Financial trade union Unite says it would not be surprised to see further job losses "at RBS in particular" and in the banking sector generally.

To end with some (slight) cheer, in spite of all its problems, HBOS hasn't followed Barclays' lead and cancelled Christmas. The bank's offices on the Mound are the location for Scottish Financial Enterprise's seasonal party again this year.