A state bailout is not on the way for the embattled banking giant at 600 Washington Blvd.
As it has grappled with chronic losses and massive fines from regulators, Royal Bank of Scotland has slashed some 740 jobs in the past three years at its Americas headquarters in downtown Stamford. While the company received generous public subsidies to move its regional hub to the city, observers do not expect state officials to dole out new funds to stem the downsizing.
“RBS is generally pulling back, and I don’t think there’s a lot the governor or state Legislature can do to avoid the pulling back,” said Lawrence J. White, a professor of finance at New York University. “Trying to give them subsidies to stay is a losing bid. You can’t turn back the clock.”
RBS did not respond to requests for comment for this article
Down, but not out of Stamford
Companywide turmoil has sparked the layoffs as RBS was wracked by nine straight years of losses before finally turning a profit last year. It has also been hit by billions of dollars in penalties for misconduct tied to mortgage-backed securities and trading.
RBS has repeatedly declined to comment on its current number of Stamford employees. Reports in recent years had pegged its local headcount between about 1,600 and 2,400 before the layoffs.
Despite the chronic job cuts, the bank has said in statements that Stamford remains an important location. Its downtown building serves as a sales and trading post — along with centers in London and Singapore — for its NatWest Markets investment bank.
“Our U.S. sales and trading operations in Stamford remain a core part of NatWest Markets, to continue providing our customers with access to the U.S. dollar markets across financing, rates and currencies,” the company said in a previously issued statement. “As we become a simpler, stronger bank, focused on serving our customers well, we are ensuring our business in the U.S. is the right size.”
Incentives, not handouts
In a deal forged in 2006, a package of up to $100 million in state tax credits supported a company investment of $400 million in the Americas hub, a glass-and-steel structure overlooking I-95 that spans some 400,000 square feet.
But RBS is unlikely to receive more public funds given the state’s current strategy for recruiting and keeping big companies. In the First Five Plus program, some 15 firms are eligible to receive a combination of tax credits, loans and grants if they meet targets for retaining and creating jobs.
“I do not believe offering any more financial support (to RBS) would be beneficial given the condition of the company,” state Sen. L. Scott Frantz, R-Greenwich, said in an email. He is co-chairman of the state General Assembly’s Commerce Committee.
The state has similarly approached its relationship with UBS, RBS’ neighbor at 600 Washington Blvd. UBS does not participate in First Five Plus, but it received in 2012 a $20 million state loan, which could have been fully forgiven if UBS retained an average of 2,000 jobs in Connecticut each year through 2021. UBS missed its jobs benchmarks in 2015 and 2016 — 2017 data are not yet available — meaning that it could now recoup, at most, $18 million if it were to reach all its remaining benchmarks.Read Full Article
“We, as legislators, have to make sure we’re holding state investments accountable to ensure we’re getting the greatest return,” said state Rep. Caroline Simmons, D-Stamford, co-chairwoman of the Commerce Committee. “That is not to say we shouldn’t invest in growing companies. But I think we need to continuously evaluate the incentives we’re giving on a yearly basis.”
State Department of Economic and Community Development officials neither confirmed nor denied discussions with RBS about the layoffs.
“For confidentiality reasons, it is agency policy that we do not disclose any details — or make any confirmations — about discussions that may be taking place with any specific company,” the department said in a statement.
As RBS and UBS retrench, a number of other large corporations are expanding in Stamford.
Charter Communications, the country’s second-largest cable provider, plans to move its headquarters within the downtown next year to a yet-to-be-built 500,000-square foot building at 406 Washington Blvd. It employs about 1,100 in the state, according to the most recent DECD count.
Last summer, Henkel relocated its consumer-goods headquarters to the downtown from Scottsdale, Ariz. About 475 work at its offices at 200 Elm St.
Also last summer, job-search firm Indeed announced it would add 500 jobs in the next few years to a existing contingent of about 750 at its downtown headquarters.
Charter and Henkel, respectively, are eligible for forgivable loans and tax credits totaling as much as $10 million and $25 million through First Five Plus. Indeed has a subsidies package worth up to $22 million through a different program.
“Rather than trying to figure out what to do with those companies that are laying off people, we should look at the industries and companies that will lead to job growth in the future,” said John Knopf, an associate professor of finance at the University of Connecticut. “And we’re seeing the state start to do that.”
firstname.lastname@example.org; 203-964-2236; Twitter: @paulschott