RBS (LON:RBS) shares rose on Monday, following the announcement of plans to cut and relocate thousands of UK jobs to India.
The state-owned UK bank said the plan was part of their on-going effort to drive down costs, as their share price languishes below the breakeven of the UK government.
The jobs were to be cut from in the department dealing with business loans which may come as a concern to small business customers.
“Many small business customers with RBS will be extremely concerned at the idea of local expert staff being sent packing and their roles outsourced to call centres halfway round the world,” said Mike Cherry, national chairman of the Federation of Small Businesses.
RBS issued a statement that may provide some reassurance to customers confirming that all contact will still be with people in the UK.
“We realise this will be difficult news for staff and we will do everything we can to support those affected…All roles which require customer contact will remain in the UK.”
Positive investor reaction
While small business organisations expressed concern at the move, the market met it with enthusiasm.
Shares were up as much as 2.5% as the markets reacted to the progress in the bank’s cost-cutting program.
RBS hasn’t posted a profitable year since the financial crisis and the UK government is down roughly 50 percenr from its 502p breakeven price.
Elsewhere in the sector, Barclay’s (LON:BARC) share price rose 2 percent and Lloyds (LON:LLOY) was broadly flat.
Sector softness
After a strong start to 2017, the UK banking sector has experienced a pull back as legal cases from the financial crisis drag on, political uncertainty hits sentiment and the prospect of a hike in interest rates diminish.
RBS (LON:RBS) traded 2.1 percent to the better at 250.7p at 15:57 London time.