LONDON - Royal Bank of Scotland (RBS) is canceling Christmas for its investment bankers this year as the government-owned lender tries to reduce costs.
The bank will stop subsidizing holiday parties and has banned staff entertainment for the rest of the year, Chris Kyle, chief financial officer of RBS' investment bank, wrote in an e-mail to employees.
RBS reduced its spending on holiday parties to $16 a head, enough to buy two pints of lager and a packet of potato chips, after receiving the biggest banking bailout in the world in the financial crisis. The lender announced 2,000 job cuts at the securities unit in August.
The bank is seeking to "further tighten and minimize the rate of spend on non-staff costs," Kyle wrote. RBS also has frozen spending on computer hardware, new BlackBerrys and additional newspaper subscriptions, he said.
"International travel for internal purposes is to cease across all areas" and air "travel under four hours duration will be in economy class without exception."
Employees also have been stopped from organizing off-site meetings and from taking taxis home at company expense before 10 p.m. All contractors will take a mandatory vacation from Dec. 19 to Dec. 30, Kyle wrote.
The lender also may have to raise capital as European Union regulators force banks to bolster themselves against losses from the region's sovereign debt crisis.
RBS might need to raise as much as $26 billion of new capital to pass a third round of stress tests, Credit Suisse Group analysts led by Carla Antunes-Silva wrote in a note to clients this week. Evolution Securities's Ian Gordon said in a note Friday that RBS has "absolutely no need" to raise more capital because the bank wrote down its holdings of Greek government bonds by 50 percent in the second quarter.
