British engine maker Rolls-Royce cuts 4,600 jobs

Rolls-Royce has some 16,000 staff at its UK operational base in Derby, above, central England. (Reuters)
Updated 14 June 2018
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British engine maker Rolls-Royce cuts 4,600 jobs

  • Rolls-Royce employs about 55,000 staff worldwide, almost half of whom are in Britain
  • Rolls-Royce had in January announced a major overhaul of its operations, reducing the number of core units and basing the remainder around civil aerospace, defense and power systems
LONDON: Rolls-Royce plans to axe 4,600 mainly British management roles by 2020 to further slash costs, the UK maker of plane engines announced on Thursday.
“Rolls-Royce announces the next stage in our drive for pace and simplicity with a proposed restructuring that will deliver improved returns, higher margins and increased cash flow,” the group said in a statement.
The London-listed company, whose engines are used in Airbus and Boeing aircraft, said the latest cuts would produce £400 million ($536 million) of annual cost savings by the end of 2020.
Rolls has faced a tough trading environment in recent years on weak demand for its power systems, in particular ones used by the marine industry, resulting in the loss of about two thousand jobs alongside the creation of new posts.
The latest update will result in the largest cull at the group since 2001, when it axed 5,000 jobs on a global economic downturn and following the September 11 attacks in the US.
“Our world-leading technology gives Rolls-Royce the potential to generate significant profitable growth,” the company’s chief executive Warren East said in Thursday’s announcement.
“The creation of a more streamlined organization with pace and simplicity at its heart will enable us to deliver on that promise, generating higher returns while being able to invest for the future,” he added.
Although Rolls roared back into profit last year, this was largely owing to a recovery in the pound.
While the plunge in the value of the pound in the wake of Britain’s 2016 vote in favor of Brexit helped many exporters, Rolls-Royce was forced to book a vast charge as it had not hedged against such a swing in the currency.
Rolls said the latest round of restructuring, leading to the loss of many corporate-supporting roles, was expected to cost the group £500 million, while about two-thirds of the job losses would be in the UK.
East, who has implemented a group-wide restructuring since his appointment as chief executive in 2015, insisted that the latest cull was not linked to repairs it has been forced to carry out on Trent engines.
Used by the Boeing 787 Dreamliner and Airbus A380 superjumbo, the engines have seen some parts wear quicker than expected, forcing Rolls to carry out costly repairs.
Rolls employs about 55,000 staff worldwide, almost half of whom are in Britain.
The company meanwhile has some 16,000 staff at its UK operational base in Derby, central England.
“Most of these management and support functions (set to go) are in Derby and therefore, it will be most strongly felt in Derby,” East said in an interview with BBC radio.
Rolls had in January announced a major overhaul of its operations, reducing the number of core units and basing the remainder around civil aerospace, defense and power systems.
“We have world-class technology in Rolls-Royce, but... (not) a world-class business to go along with it,” East said Thursday in a call with reporters.
At the same time, the company has said it would consider selling its commercial marine business, while in April, Rolls sold German division L’Orange for €700 million to US group Woodward.
Speaking to the BBC, East said he saw opportunities in China.
“We look at China and we see an opportunity there for aircraft engine... that’s where a lot of opportunities are.”


Danske Bank money laundering ‘giga scandal’ spreads to Britain

Updated 13 min 9 sec ago
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Danske Bank money laundering ‘giga scandal’ spreads to Britain

  • By 2013, the number of UK-registered customers in the branch’s non-resident portfolio had topped 1,000
  • Danske Bank Chairman Ole Andersen said that the lender had made an assessment of whether it violated any US laws
LONDON/COPENHAGEN: Danske Bank’s money laundering scandal spread on Friday as Britain’s National Crime Agency (NCA) said it is investigating the use of UK-registered companies.
“This is a giga scandal,” European Union Competition Commissioner Margrethe Vestager said, joining a growing chorus of calls for a clampdown on the billions of euros which are alleged to have been “washed” through European banks.
An NCA spokeswoman said the British agency was working with partners across government to restrict the ability of criminals to use UK-registered companies in money laundering.
British and Russian entities dominate a list of accounts used to make €200 billion ($236 billion) in payments through Danske Bank’s branch in Estonia between 2007 and 2015, many of which the bank said this week are suspicious.
By 2013, the number of UK-registered customers in the branch’s non-resident portfolio had topped 1,000, Danske Bank’s investigation revealed, ahead of clients from Russia, the British Virgin Islands and Finland.
As the scope of the alleged money laundering through Danske Bank has widened, investor concerns over the potential penalties it could face have increased, with particular focus on what action if any US authorities might take against the bank.
So far, the US has not said whether it is investigating, although Danske Bank Chairman Ole Andersen said that the lender had made an assessment of whether it violated any US laws. He has declined to share the bank’s conclusion of this.
“We need to do more to prevent money laundering from happening,” Vestager told reporters in Copenhagen following the resignation on Wednesday of Danske Bank CEO Thomas Borgen after an investigation commissioned by the bank exposed past control and compliance failings.
Borgen, 54, was in charge of Danske Bank’s international operations including Estonia between 2009 and 2012.
He said on Wednesday that he had been “personally cleared from a legal point of view” while Danske said its board had not breached their legal obligations.
The European Commission last week recommended banking supervision changes, including bolstering national authorities, but stopped short of setting up a new financial crime agency called for by the European Central Bank.
In a sign of the growing pressure on Danske Bank, which already faces criminal inquiries in Denmark and Estonia, the chief executive of CARE Danmark said on Twitter that the Danish charity had decided to end its relationship with the lender.
International aid charity Oxfam also called on Danish municipalities to cut ties with the bank, saying it has not been able to re-establish the trust of Danish citizens.
The mayor of Aalborg, Denmark’s third largest municipality, said he would discuss its partnership with Danske Bank at the next municipality committee meeting, but noted that there were only two banks in Denmark would be able to handle a municipality its size.
“Danske Bank has been involved in money laundering which is deeply reprehensible and outrageous but Nordea has been involved in tax havens, so the entire bank sector needs to clean up for us to have a trusting collaboration with the banks,” Thomas Kastrup-Larsen said.
Danske Bank’s tiny Estonian branch accounted for as much as 10 percent of group profit during the period when suspected money laundering was conducted via its operations there.