This article is more than 11 years old

This article is more than 11 years old

Royal Bank of Scotland yesterday angered unions and politicians with plans to cut up to 4,500 staff in Britain as part of a worldwide reduction of 9,000 posts.

The bank, which is 70% owned by the taxpayer, said the cuts were part of a policy to save about £2.5bn over the next three years.

The Unite union said the cuts were a "devastating blow" for staff at the bank's Edinburgh headquarters where most of the UK job cuts are expected to fall.

Many Scottish parliament members (MSPs) were resigned to the loss of large numbers of staff following the collapse of the bank last year and its £20bn bailout by the government.

But there was anger last night among many politicians after it was pointed out that a bank boss had denied further job cuts at meeting two weeks ago. The bank's deputy chief executive, Gordon Pell, the only survivor from the regime of disgraced former boss Sir Fred Goodwin, told a committee of MSPs he was unaware of large scale job cuts in the pipeline.

RBS sought to head off criticism of the cuts with a statement of its determination to minimise compulsory redundancies. It has begun consulting unions over the job cuts, which will affect up to 9,000 people in 50 countries over the next two years, in back-office operations ranging from IT services to property management.

The bank said the actual number of jobs lost was expected to be "significantly lower" as it would try to redeploy people.

RBS, which is believed to be preparing a further round of cuts later in the year, has already shed 2,700 jobs at its main centres in Edinburgh, London, Manchester and Bristol.

Gordon Brown entered the debate over the future of the industry last night when he told Britain's leading banks that the plight of RBS showed the need for the reform of the financial sector.

At a meeting of the Lending Panel, the body in which the government and the main banks review lending levels, the prime minister said the financial sector would only prosper if it was reformed.

A Downing Street spokesman said: "We needed to continue to reform financial regulation in Britain. Britain was a world centre for financial services and, with the right reforms in place, could continue to be a leading centre in the future.

"The financial sector would continue to be integral to Britain's future prosperity, but it must be reformed to reflect the changing global circumstances we face."

Stephen Hester, RBS chief executive, echoed Brown's comments, saying the bank needed to withdraw from riskier areas. A cost cutting programme was also needed to bring it back into profit. "Unfortunately that means taking difficult decisions about jobs as well as taking many other cost reduction actions."

RBS employs 170,000 people, 106,000 of whom are based in the UK. Its back-office operations employ 45,000 people worldwide, including 27,000 in Britain.

Rob MacGregor, Unite's national officer, said the union was "appalled that thousands of people, who form the backbone of the RBS operations, are to be made redundant".

He added: "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."

Shirley-Anne Somerville, SNP MSP for Lothians, which includes the RBS headquarters on the outskirts of Edinburgh, said: "Today's announcement will be devastating for those working at RBS and will cause great concern across the city as we wait to find out where the job losses will take place.

"After RBS initially said only 2,500 jobs would go, these figures are a dramatic increase. I have already contacted the Scottish government and I am confident SNP ministers will give every support they can to those who now face redundancy."

Meanwhile, the corporate governance lobby group Pirc called on BP shareholders to oppose the reappointment of former RBS non-executive Sir Peter Sutherland as the oil group's chairman. It drew attention to Sutherland's role on RBS's remuneration committee, which approved Goodwin's £703,000-a-year pension.

"His actions as a non-executive director of Royal Bank of Scotland and as a member of its remuneration committee bring into question his suitability as BP's chairman," Pirc said.

A BP spokesman said Pirc's views were not shared by most BP shareholders.