RBS’s Ulster Said to Plan Job Cuts, $64 Million of Savings
Royal Bank of Scotland Group Plc’s Irish unit is preparing its second round of job cuts in four years as part of an effort to save about 50 million euros ($63.9 million), according to two people with knowledge of the plan.
Dublin-based Ulster Bank Ltd., which eliminated 1,000 jobs in 2009, or about one-seventh of its workforce, plans to make an announcement tomorrow as its Edinburgh-based parent also unveils restructuring measures, said the people, who declined to be identified as the talks aren’t yet complete. Not all of the savings will come from eliminating jobs, one of the people said.
“The likely announcement from Ulster highlights the difficult income trends facing the Irish banks in the coming years,” Eamonn Hughes, an analyst at Dublin-based Goodbody Stockbrokers, said in a note today. A 50 million-euro savings figure equates to about 8 percent of the Irish lender’s estimated 2011 costs, he said.
Ulster Bank, where assets doubled to 55 billion pounds ($85.1 billion) in the four years through the 2007 peak of the Irish real-estate market, took a cumulative 7.5 percent impairment charge against its loans between 2008 and 2010, according to a report published last month by the U.K. Financial Services Authority. RBS, controlled by the British government, has injected about 6.7 billion euros into Ulster Bank since 2008 amid mounting losses, according to filings and press reports.
An RBS official in London declined to comment. Tomorrow, the bank will announce plans to close its equities and corporate finance units globally, cutting as many as 5,000 jobs, two people familiar with the situation have previously said.
Ulster Bank Chief Executive Jim Brown, who took over in April from Cormac McCarthy, said in an interview with the Irish Times in October that he “wouldn’t rule out job losses, but it is not something we have formed a view on.”
RBS acquired Ulster Bank in 2000 as part of its purchase of National Westminster Bank Plc and expanded three years later through the acquisition of First Active Plc, Ireland’s oldest building society. Ulster Bank’s operating loss widened to 761 million pounds in 2010 from 368 million pounds in 2009.
RBS pumped about 2.7 billion euros of capital into Ulster Bank up to the end of 2009, according to records in Dublin’s Company Registration Office.
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