Royal Bank of Scotland Group Plc is preparing to cut more than 1 billion pounds ($1.25 billion) of annual operating costs by eliminating jobs and closing branches as it seeks to bolster profitability, said a person with knowledge of the plans.
RBS’s cuts may need to exceed 1 billion pounds, the person said. David Lock, an analyst at Deutsche Bank AG, wrote in a note this month that he expects RBS to target a total cost base of 7 billion pounds by 2020, which would necessitate cutting 1.5 billion pounds to 1.6 billion pounds of expenses.
The lender will probably make cuts in administrative roles and look to simplify processes to eliminate the need for as many staff to handle tasks such as opening bank accounts, the person added. While RBS will look to cut costs, the lender will also consider investing in upgrading its IT systems to improve efficiency and lower expenses, the person said.
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