The banking bailout of RBS is continuing to wreak havoc on the economy as businesses involved in previous banking disasters are forced to make major cutbacks. The latest in the firing line being Direct Line Insurance.
The Direct Line insurance group also own the Green Flag and Churchill brands. Combined staff average around 14’400 employees.
Since last August, the company have been implanting cost-cutting measures to cut back overheads by a total of £100m per year. That’s a huge cutback for any organisation and whenever that amount needs cut from any business overheads…jobs are sure to go.
That’s been witnessed since August until now, as 1’200 jobs have already been cut, with a further 2000 jobs set to go.
Direct Line are assuring everyone that they know the impact the job cuts will have on their people, and they haven’t took the cuts lightly. They are assuring and working with staff with a view to deploy people to other jobs wherever they can, in an effort to minimize the impact.
Discussions are continuing with employee representatives to put supportive measures in place.
The job losses are likely to affect those working in the head office, as well support consultants within the organisation. Those jobs will be redeployed wherever possible.
The total cutbacks are estimated to affect 14% of the company’s overall workforce.
For anyone who has been following the news surrounding the government bank bailouts, you’ll likely be familiar with the RBS situation. The bailout that saw UK government take the position of the major shareholder in the Royal Bank of Scotland.
Alongside RBS, was Lloyds banking group. Then there was the 100% ownership of Northern Rock, when that group hit rock bottom, later to be sold over to the Virgin Money Group.
That’s part of the reason for the UK Financial Investment LTD company to be founded. It was a direct government response to tackle the financial crisis, back in 2008.
Now that the country is through the worst of the financial crisis, had a AAA credit rating reduced to AA+, and now focusing on getting the country back on its feet, the financial sector is seeing changes at an extremely fast-paced rate.
Part of the banking criteria for RBS funding, required what’s referred to as a “corporate spin off.”
The bank funding invested into the Direct Group by RBS currently stands at 48.5%. When directly were spun off, the terms specified by UKFI LTD, specify that the RBS must sell off their entire stake with Direct Line Insurance by the year-end of 2014.
Only 18 months away now, which brings…
Back in September 2012, staff at the Teesside call centre faced uncertainty of their futures, as the option was there to shut down operations as part of the drive to cut costs.
That closure is confirmed now, and is scheduled to cease operations in Teesside next week. The majority of supporting jobs will be affected in that area, although the company are keen redeploy where possible.
While the staff of the company are facing uncertain and nerve wracking times as the need to slash costs in the best interest of business growth, the firm are still holding firm ground, considering the loss of their banking investors.
The cost cutting drive is on target, and could possibly save even more as they continue to drive down the costs.
The aim of the cuts are described by Chief Executive, Paul Geddes, as an important step in their companies future, to regain a competitive advantage.
The insurance market is cut throat, and the company are continuing to see investment, but it does need to lower operational costs to continue doing business, and securing the thousands of other jobs they already have.