April 7 (Bloomberg) -- Royal Bank of Scotland Group Plc, the biggest bank controlled by the U.K. Treasury, plans to eliminate as many as 9,000 more jobs worldwide as it seeks to repay a government bailout.

The cuts, which total about 5 percent of RBS’s global workforce, include 4,500 jobs in Britain. The actual number of positions lost may be “significantly lower” because of efforts to shift employees into new positions, Edinburgh-based RBS said in a statement.

RBS may be forced to eliminate more jobs as it seeks to cut costs by 2.5 billion pounds ($3.7 billion), or 14 percent, over three years and return the bank to investor control. Job losses of 20,000 are “not irresponsible speculation,” Chief Executive Officer Stephen Hester said Feb. 26. Today’s announcement came as the U.K. government increased its stake in RBS to 70 percent.

“To cut 14 percent of costs when staff costs are around 60 percent of total expenses, there are a lot of job losses to come,” said Simon Willis, a London-based analyst at NCB Stockbrokers Ltd.

Most of the positions will be eliminated in the bank’s group manufacturing division, which includes technology, purchasing and property services, RBS said. The cuts are in addition to 2,700 previously announced job losses.

RBS Strategy

RBS employs about 170,000 people worldwide, including 45,000 in the group manufacturing division. In February RBS said the bank would “significantly” reduce operations in or withdraw from 36 of the 54 countries in which it does business.

“We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable,” Hester said in today’s statement. “Unfortunately, that means taking difficult decisions about jobs.”

RBS fell 10 percent to 26.7 pence in London trading, pushing its decline over the past 12 months to 92 percent. Analysts at Sanford C. Bernstein & Co. today lowered their recommendation on U.K. banks, saying share prices already reflect future prices. Lloyds dropped 8.5 percent to 72.9 pence and Barclays Plc declined 8.6 percent to 157.7 pence.

RBS was forced to take a 20 billion pounds in state aid last year after writedowns linked to the 14.3 billion-euro purchase of Amsterdam-based ABN Amro Holding NV that was completed as credit markets froze in 2007.

The bailout gave the government 58 percent of RBS. The Treasury increased that stake today as investors shunned a rights offering that was used to convert into equity 5 billion pounds of preference shares held by the government. The deal will save RBS 600 million pounds a year in dividend payments.

‘Totally Blameless’

The additional job cuts may irk lawmakers faced with rising unemployment. The number of unemployed Britons rose above 2 million for the first time since 1997 in February.

RBS has been the focus of public anger because of the 703,000-pound a year pension paid to former CEO Fred Goodwin after the bank reported a 24.1 billion-pound loss for 2008, the largest in U.K. corporate history.

The Unite trade union said it is unfair that RBS employees are losing their jobs because of the mistakes made by senior management.

“These employees are totally blameless for the current position which RBS is in, yet they are paying for the mistakes at the top of the bank,” the union said in a statement.

The job cuts follow similar announcements by other U.K. financial service companies. Last month, London-based HSBC Holdings Plc said it was cutting 6,100 jobs globally. Aviva, the U.K.’s second largest insurer, plans to eliminate 1,100 jobs.

To contact the reporter on this story: Andrew Macaskill in London at amacaskill@bloomberg.net

Last Updated: April 7, 2009 11:46 EDT