British state-owned Royal Bank of Scotland PLC (RBS) yesterday said it expects to close 259 branches and cut 680 jobs as it reduces costs and encourages customers to use online and mobile services.
The latest round of closures at the Edinburgh-based bank follow 180 announced in March, putting 1,000 jobs at risk, and a similar move by Lloyds Banking Group PLC, which on Wednesday said it would close 49 branches.
British banks are set to close a record 762 branches this year, Reuters reported in August, drawing criticism for depriving customers of access to in-person services, particularly in poorer parts of the country.
Customers are increasingly using mobile and online channels rather than bricks-and-mortar branches, and RBS had to react to that, RBS managing director of branch banking Jane Howard told Reuters by telephone.
“There will be some customers that will be really disappointed that we are closing branches ... and I understand why. But it is important that we do respond,” she said.
RBS is investing in its remaining branches and its digital offering, Howard said, adding: “Given what we know, we have got the right shape of network.”
The latest closures will affect the bank’s RBS and Natwest brands in England, Wales and Scotland, leaving it with around 744 branches.
The bank reported a better-than-expected operating profit for the third quarter of this year after keeping expenses under control and avoiding any misconduct charges, which, along with restructuring costs, have dogged the bank’s return to profitability since the financial crisis.
LEGAL HINDRANCE
RBS hopes to post its first profit since 2007 next year, but that depends on when it reaches a multi-billion pound settlement with the US Department of Justice over the mis-selling of toxic mortgage backed securities in the US.
Meanwhile, one of Sweden’s main financial-worker unions said the job cuts announced in October by Nordea Bank AB are just the beginning of a transformation that is about to hit the whole industry as more financial firms come to rely on digital solutions.
The Nordic region’s biggest bank has yet to reveal to its staff exactly which employees are to be affected by the cuts.
Nordia intends to get rid of 4,000 full-time employees and 2,000 consultants, it said.
Those announcements are to be made internally and department by department at regular intervals over the coming years, the bank said.
Employees at other banks should get ready for similar developments, said Mikael Andersson, head of negotiation at Sweden’s Civilekonomerna, an association of graduates in business and economics.
“Nordea, with its announced job cuts, is no exception,” Andersson said by telephone on Thursday. “This development with rationalizations will also happen at other banks, as it is general.”
Nordea chief executive officer Casper von Koskull has gone so far as to say that the financial industry might have half as many workers a decade from now as it adjusts to a digital revolution that will make several human functions redundant.
This will affect simple tasks like reporting lost or stolen credit cards, but can even be extended to more sophisticated jobs, including functions supporting investment banking, Nordea chief digital officer Ewan MacLeod said.
“The whole sector is sitting in the same structural boat,” Andersson said. “What Nordea talks about are costs for technology development of, for example, savings solutions and partly robotized services, and digitization. These developments are coming across the banking and financing sector.”
Additional reporting by Bloomberg
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