RBS hints at more redundancies despite profits

Despite posting its first quarterly profit this time last year, Royal Bank of Scotland is still likely to make redundancies going forward and is hemorrhaging staff at "damaging" levels.

RBS's first quarter results show an operating profit of 713m - the first profit since the Q1 2009, when strong investment banking performance pushed it 179m into the black.

Stephen Hester, the bank's CEO, has admitted that the bank is still suffering "damaging" losses of people "throughout RBS", but that departure levels are not yet "destructive".

It's safe to say that the number of people seeking pastures new within its global markets division will be of most concern to RBS. The investment banking profits of 1.5bn in Q1 were less than half of the 3.5bn achieved this time last year.

Hester admitted this division has the "greatest people retention challenges".

More concerning to RBS's employees north of the border, however, is the fact that the bank still has another 500m of cost reductions to deliver by 2011. The bank said that "while the most substantial reductions have been completed there are more to come".

It's questionable whether RBS's staff north of the border should be overly concerned with ongoing cost-cutting, however.

Hester has already promised that Scotland will be spared any deep cuts in future redundancy announcements and - as we've highlighted previously - it also seems to be benefiting from RBS's new-found appetite to hire. This is, however, still largely restricted to risk and change management roles.

There's also the fact that RBS appears to be focusing on its retail and commercial divisions once again, which could be beneficial to bankers north of the border.

"RBS's retail and commercial businesses are beginning to recover and should drive our growth over the next few years," said Hester.