Ross McEwan, chief executive of Royal Bank of Scotland, is preparing to unveil further cost cutting measures after receiving pay of around £3m in 2016.
The cost-reduction measures – which will be unveiled alongside the bank’s ninth consecutive annual loss later this month – are expected to coincide with confirmation of his pay deal for the 2016 financial year. McEwan could be paid more than £3m after £2.7m of salary and allowances are topped up with bonuses.
He has already admitted he will miss his target to cut the bank’s cost-income ratio – a key measure of efficiency – by 2019 because of the vote for Brexit. He had wanted to hit 50% in two years’ time, cutting the ratio from above 60%. Analysts now expect him to announce measures to take more costs out of the business.
Speculation that jobs could be at risk have risen since the New Zealander indicated he needed to spell out ways to shed more costs from the bailed-out bank when the 2016 results are published on 24 February.
The bank will also unveil its bonus pool for the loss-making year. The pot is reported to stand at £340m. In 2008, the year the bank was bailed out, the pool stood at £1.4bn. Lloyds Banking Group, where the government stake has fallen to below 5%, is expected to have a larger bonus pool.
When RBS failed its annual health check in November it said a cost-cutting programme, along with efforts to reduce the size of the business, would help bolster its financial strength.
RBS would not comment before the results but analysts say new technology could be used to cut costs, and reduce the bank’s headcount.
Gary Greenwood, banks analyst at Shore Capital, said he expected the bank to embark on a more aggressive cost-cutting programme. “The costs lever could be pulled harder ... [by] rolling out IT and making best use of digital channels ... to some extent [job cuts] come with that.”
McEwan has already taken out almost £3bn of costs since taking over from Stephen Hester three years ago. He is tryingto reach a settlement with the US Department of Justice over a toxic bond mis-selling scandal(RBS said last month would take a £3.1bn hit towards the bill). He also needs to spin out 315 branches to meet the terms imposed by the EU at the time of RBS’s bailout.
Analysts at Barclays said that cutting costs would remain a key focus across most of its retail and commercial businesses.
• This article was amended on 8 February 2017. An earlier version said RBS shared among its bonus pool among staff, who also work in NatWest branches. RBS has scrapped sales bonuses for staff working at its retail banks.
