The Lloyds Banking Group always made top news as their PPI mis-selling refund figures double what Barclays or RBS have. The two banks mentioned only have £2.2 billion and £1.6 billion respectively. However, the refund provisions affect both banks with ongoing job cuts and business ringfencing.
Recently, Barclays revealed an 8 per cent drop in its profits due to its huge refund bill. This had the bank eject former CEO Anthony Jenkins then replace him with Jes Staley. Staley had focused on recovery, cutting jobs relentlessly across Barclays’ business to guarantee profits.
Staley had removed 448 trading support jobs from its investment bank operations. This guarantees an £800 million annual profit by 2019.
Directors and senior officials had given up about 2 million shares to cover Barclays’ tax liabilities from their earlier profits.
For RBS, the bank focused on cutting back office and middle office within its corporate and institutional bank to shrink its different divisions. However, it is expanding its business in India to reduce costs. Outsourcing, along with technology, is part of RBS strategy to retain profits.
To reduce the likelihood of insurance mis-selling and high costs of retraining and commissions, the Bank had previously cut 550 adviser jobs. Its investment advice service for customers only has a budget of £250,000 as a ‘robo-adviser’ would serve more customers with smaller savings.
RBS is also facing a civil case from the US Federal Housing Finance Agency due to its mis-selling of toxic mortgage. To address its defined benefit scheme deficits, the bank also has to pay an additional £1.6 billion to its capital reserves.