The job cuts are one of several major decisions aimed at returning RBS to health in order to sell the bank back to private investors. RBS has reduced its workforce over the last four years in order to limit expenses and return the bank to profitability.

David Cameron has weighed in on the bank’s decision to cut costs, stating that the end goal of the layoffs is to make RBS a viable private business once again. The jobs that have been removed were primarily administrative positions in RBS’s offices.

The bank plans to restructure its UK-based retail banking business and will slowly cut back its employment numbers over the next two years. The move is one part of RBS’s long-term plan to return to its pre-crisis financial position.

Despite its unique financial situation, RBS isn’t the only bank engaging in sizable layoffs. Global banking giant HSBC is considering cutting its workforce by 14,000 due to the increasing regulatory costs of operating its business in certain markets.

The large bank would focus heavily on Asian investments, aiming to earn more from a market that’s historically been it’s top performer. The East Asian banking giant has over 260,000 employees currently, making it one of the world’s largest banks.

Chief executive Stuart Gulliver claimed that the job cuts were one of several moves aimed at making HSBC more ‘ready to take advantage of growth opportunities. The bank recently reported earnings of $8.4 billion during the first quarter of 2013.

This new lending scheme has been anticipated by banks and building societies in the UK because it will enable them to trade off debt or Treasury bills that are similar to cash. There will be a small fee involved but in all, this should help to lower their costs and in turn, the borrower’s cost as well.

When looking at this from a financial perspective, if a homebuyer has a deposit of 25% and is looking for a two year fixed rate mortgage, the savings would be at a rate of about almost 1%. At the moment, rates for this type of mortgage are averaged at 3.68% but with the lending scheme, those rates would probably be lowered to about 2.7%. Homebuyers with a 10% deposit should find a 1% reduction in mortgage rates down from 6% where they currently are to 5%.

The aim of government, according to the Chancellor, is to make loans and mortgages more affordable. Also, this should make them more available as lenders would be able to trade those troublesome loans for Treasury bills. Lenders will be rated quarterly and the results will be published. Information to be published will include how much volume each bank is doing and specific details of their lending schemes.

According to this new lending scheme, banks should be incentivised to increase their lending. The bottom line is that the more a bank lends, the lower their fees/rates will be. These rates will be guaranteed for up to four years and the scheme will commence on 1 August.

At a time when the entire nation is undergoing cuts and in the midst of austerity, Gulliver is taking home a huge salary of at least £8 million whilst thousands are being cut because the bank cannot afford the salary overhead.

According to the national officer for Unite, David Fleming, Gulliver is guilty of flagrant hypocrisy when he doesn’t object to his own salary but intends to cut a total of 30,000 jobs altogether before all is said and done.

This latest round of cuts will be within middle and senior management jobs, Gulliver claims that only, in his words, a small portion would affect staff who directly serves customers. Of the number being cut from the workforce and the UK, 2,217 workers will be made redundant within the coming months.

These job cuts within the UK are on a par with those across the entire group, that being one in every ten. Since operations on high street employed approximately 40,000 workers this is roughly one-tenth as projected. Mr. Fleming also states that there is no justification for staff being treated in this awful way after having reported profits of £13.8 billion last year.

Even so, 650 workers are being cut because of the way financial advice is being offered as a result of regulatory changes. The head of the UK branch of HSBC, Joe Garner, says that workers who will be losing their jobs have his deepest sympathy and he promises to keep the number being made redundant to a minimum.

Of particular note to shareholders is the exorbitant £17 million paid to Bob Diamond, the chief executive and the additional £5.7 million to cover his taxes when he came from the United States to take up his position. The Institute of Directors has stated that Barclays has a pay scale that is out of line and Diamond is refusing to comment on both the shareholders’ protest and statements made by the Institute.

It is predicted that other banks will need to follow suit in upping their PPI allocations. Many believe that HSBC and the Royal Bank of Scotland are next in line to increase the amount of money to set aside for PPI claims compensation. In terms of loss Barclays sustained, the amount has been estimated at £475 million pre-tax in statutory losses.

Even through all this, Barclays realised a 22% increase in profits which are said to be £2.4 million and this is actually much higher than anticipated. As a result, shares are up by 1.7%. According to Investotec banks analyst, Ian Gordon, the reason for this increase in value is largely due to performance of the Capital investment arm of the bank. In fact, revenues were 91% greater than the quarter before.

As the UK has been plunged into a double dip recession, the bank is sustaining losses in the eurozone. A good percentage of the losses Barclays sustained are due to its Spanish enterprises even though the amount lost has decreased over the previous quarter. Fallout from high pay and losses sustained through mis sold PPI are expected to be the highlights of tomorrow’s meeting.

Two banks in particular have been mentioned by this newspaper, which include the Royal Bank of Scotland and Barclays. According to Damien Reece writing for The Telegraph the Royal Bank of Scotland has reportedly admitted to selling interest-rate swaps as derivatives and that Barclays did settle out of court in order for details from reaching the public. According to Reese, Barclays had also previously been forced into an apology to the FSA because it had come to light that they had asked their customers to withhold important information from the UK regulator.

According to the investigation conducted by The Telegraph, Professor Emeritus Michael Dempster of the Centre for Financial Research, University of Cambridge, believes that this could be easily as huge as the £5 billion scandal in the misselling of payment protection insurance. The Telegraph reports that the FSA has given them a promise to review the evidence it has been handed but Mr. Reece believes they are not moving quickly enough. During this time the problem is compounding itself which will mean that businesses are incurring even greater losses. He further states that the paper has done more than its fair share of doing the FSA’s job for them.

The report further indicates that almost 33% of firms applying for loans in 2011 were refused whereas only 4% were refused in 2007. These figures are all the more staggering when looking at the fact that more than 60% of new businesses looking for an initial overdraft are being refused and of those, 44% had need of a loan.

Even though fewer firms are looking for loans to facilitate expansion, fewer businesses are actually qualifying for loans. There is a desperate need to provide financing for SMEs in the UK, according to shadow secretary Chukka Umunna. These smaller firms are actually being put off from making applications. Umunna feels that this should be addressed immediately by banks as well as by government.

Risk was a factor which kept banks from lending money as well as a business’ track record. As well, it was found that firms are not reaching far enough afield and banks see this in a negative light. When polled, British bankers said that firms should be looking to capture markets abroad instead of relying on the market in the UK.

Even so, those businesses with a sound plan are still able to find financing and although loans are declining there are still funds available with UK banks. If a firm has a good track record and relationship with a bank, odds are in their favour for securing a loan.

In September, as a result of a major complaint lodged against banks by Consumer Focus, the Office of Fair Trading embarked upon an investigation into banks that had been charging unfair fees for purchasing foreign money with debit cards in the UK. Also, the OFT scrutinised how banks were going about disclosure when it came to transaction fees and charges. A huge part of the complaint was that banks were not clear on the amount and types of charges their customers would be assessed when buying foreign currency with their debit and credit cards.

The banks which have agreed to drop these fees include the RBS, Barclays, Santander, Lloyds Banking Group and the Co-operative Bank. To date, these charges for buying foreign currency amounted to anywhere from 1.5% and 2% of the amount being purchased. For example, a UK consumer was being charged an extra transaction fee of £10 plus £30 when using a debit card to purchase 500 euros.  However, towards the end of next year these additional charges for buying foreign currency in the UK with debit and credit cards will be dropped.

This does not account for buying foreign currencies while out of the country. However, at least the new disclosure laws will make it clearer to consumers what and how they will be charged when using their debit cards abroad for the purchase of foreign currencies. The super complaint lodged by Consumer Focus has brought about quick results which will affect approximately 40% of purchases of foreign currencies in the UK as that is the percentage bought with cards.

According to experts in the industry, this is just the beginning of what needs to be done to end the confusion among consumers. Dropping fees at home is a step in the right direction, but banks now need to focus on better disclosure because consumers are still, in many cases, spending at least 10% more than they need to when purchasing foreign currencies.

As well, Mr. Osborne is backing the Vickers’ suggestion that retail banking needs to be protected from investments which are too risky. In an effort to avoid a financial disaster similar to that of 2008, changes are being made. The Chancellor also announced that the RBS, state owned bank, would be significantly reducing the level of its investment banking.

One of the most important aspects of the changes being legislated is to ensure that deposit bearing accounts will be ring-fenced in and not allowed to be affected by high risk investments. In the past, unsecured loans were known to take precedence when banks began to fail and this will not be the case with the new rules in place.

Deposit bearing accounts will now be first in line to recoup money and now the British economy will have a separation of risky investment banking and high street banking. According to the Chancellor, government’s goal is to protect the economy and taxpayers from banks that simply grow too large. The emphasis is on keeping banks from getting ‘too big.’

Another area of focus will be that banks need to have bigger ‘cushions’ in the event that large losses occur, making banks better able to withstand them. In the end, these changes being instituted will cost the banking sector anywhere from £3.5 billion to in the vicinity of £8 billion but the benefit to the economy is evident in that a repeat of the 2008 financial crisis could be avoided.

At the moment the daily maximum penalty for insufficient funds on direct debits is £8, but the changes Barclays has instituted will bring that maximum up to £24 in the event that three payments are missed within a single day. Consumer Focus noted that these new higher charges have been the direct cause of keeping a number of people from opening a bank account.

As well, the group noted that it will be next to impossible to function in the 21^st century in the absence of a bank account and this will create financial problems for those who could least afford to be without at least a basic account. Government is already trying to convince consumers to open bank accounts and these new penalties will make that task even harder.

However, a Barclays’ spokesperson says that they are already the most accessible banking institution in the UK as they are one of the only two banks that offer a basic account to persons who have undischarged bankruptcies. It is the position of Barclays that these new fees will enable the bank to make basic accounts available because it will help in keeping the product “financially sustainable.”

The spokesperson even went as far as saying that these higher fees are the result of research within their own customer base and clients of CAB. Even so, Consumer Focus feels that the most vulnerable consumers are being left with no recourse but to forego a bank account or suffer unusually high penalty fees.

Mr. Osborne feels that he and the BoE have given plenty of advance notice and that banks need to take a serious look at end of year bonuses or face consequences. Although it wasn’t immediately clear what those consequences would be, there are definite plans on the table to begin transforming the public sector by early in 2013. He is committed to bargaining of wages locally  so that pay within the public sector will adversely affect local markets.

It is reported that unions are not amenable to local wage bargaining but that the proposal to do so would be a way to stimulate the economy in the private sector in hard hit regions of the UK. These areas have public sector jobs which are comparable to those in the private sector, but the public sector is paid at a significantly higher pay rate.

By bargaining locally it is felt that there will be better equality of wages in these regions which would in turn stimulate financial growth. It is also felt that local wage bargaining for the public sector will prevent crowding out of private enterprises since the public sector traditionally outcompetes them in terms of wages and benefits.

The forecast date for reviewing local basic pay rates is 17 July of 2012 which the Chancellor feels would allow for plenty of time to prepare for the 2013-14 FY. However, there are groups of public sector workers which would be excluded from these changes including the armed forces, dentists and doctors. More information will be revealed on Budget Day which the Chancellor has set for 21 March, 2012.