Maybe Scotland shouldn't fret too much over new RBS cost-cutting
Last week was not a good one for Royal Bank of Scotland; it was included in Moody's much-anticipated downgrade of UK banks and could require recapitalisation of up to €12.5bn after applying haircuts to its eurozone sovereign bond exposure.
Not surprisingly, talk has already turned to where it will need to cut costs. Even before this, in a presentation to the Bank of America Merrill Lynch Banking and Insurance CEO conference, Stephen Hester was talking about a need to "reduce the cost base further" in response to the economic slowdown and challenges facing the investment banking industry.
RBS has, of course, already cut over 21,500 jobs in the UK, and the 15,000 people employed in its Scottish HQ have every right to feel nervous about the latest developments. There's every chance that more roles could go, but all the signs currently point to London feeling the majority of the pain.
It already trimmed 200 posts from its corporate and advisory business in June, outlined plans for another 2,000 job cuts in its global banking and markets division in August and has warned of further cuts in its investment bank and treasury functions.
Investment banks are shedding jobs in response to severely impacted trading revenues, and it's unlikely that RBS will prove to be the exception in this regard.
By contrast, the mood north of the border is, well, fairly buoyant. It currently has nearly 140 vacancies in Scotland across group, retail and insurance functions and, according to recruitment sources, this is the "tip of the iceberg".
"We're speaking to recruitment managers who have around 60 vacancies in one department," says one financial services recruiter in Edinburgh. "They're looking to fill roles internally before extending the search externally."
One senior corporate banker based in Edinburgh says that banks in Scotland are being forced to recruit more because of a change in mindset among their employees.
"It's only since the financial crisis hit that people working in Scotland's banks have become more mobile in their job search," he says. "Previously, people worked their way up in a single organisation and worked their way up. In the wake of swathes of job cuts, they've realised there's real rewards for loyalty any more."
