We're a third of the way through Scottish financial job cuts

Before you start using the term 'green shoots' in relation to Scotland's financial sector, it's worth noting we're probably only around a third of the way through redundancy announcements. So, where are the cuts likely to fall and are there any reasons for optimism?

The job cuts so far in Scotland's financial services sector are just "the tip of the iceberg" according to the latest Ernst&Young Scottish Item Club report into the economy.

The recent redundancy announcements include 150 posts at Aegon announced last week, 300 corporate banking jobs at Lloyds/HBOS, 50 sales roles at Scottish Widows and Clerical Medical, rumours that Citi is about to shift positions to Poland, and RBS's decision to axe 4,500 'group manufacturing' jobs - the bulk of which are in Scotland.

"We're saying there will be around 10,000 financial services jobs lost in Scotland over the next two years, and we're about a third of the way through that," says Dougie Adams, an adviser to the Scottish Item Club. "The bulk of these will be within banks, with the redundancy announcements coming in larger numbers within smaller salary brackets."

However, Adams says there's a "silent cull" within fund managers and insurance firms north of the border, often usually 10-15 positions, that tend to fall under the radar.

Reasons for optimism are few and far between. Tesco Personal Finance is creating 250 post in Edinburgh, Virgin Bank will eventually employ 100, BNP Paribas remains on target to recruit 80 this year for its operations division, and Shore Capital is looking to recruit. There's also the 500 call centre roles esure is hiring for.

"A lot of what Scotland does is the plumbing of the system, and this could work either way for it," says Adams. "Firms could close office A and keep office B open, which could benefit Scotland or see more job losses. Employees here are skilled, and marginally cheaper than other areas of the UK, but office space is expensive, and these roles could be offshored anyway."

But Douglas Kinnaird, director of Scottish headhunters Kinnaird MacDonald is more optimistic: "Fund managers and insurance firms are focused on cost-cutting, but this is because of the recession - they remain systemically sound. From the conversations we're having, the feeling we get is once things start to turn around, there's going to be a tidal wave of hiring."