LONDON, Jun 26 – Direct Line Group, the British insurer being sold by state rescued Royal Bank of Scotland, said Wednesday that it planned to axe 2,000 jobs and more than double its original savings target.
Direct Line said that it was now looking to slash annual costs by more than £200 million ($308 million, 236 million euros).
“This is another step in the ongoing transformation of Direct Line Group and an important part of our aim to regain competitive edge,” Direct Line chief executive Paul Geddes said in a statement.
“While we continue to invest in the business with the aim of winning in a market which is changing fast, it’s clear that we need to become more efficient to deliver the good service and value our customers expect.
“We have not made these proposed changes lightly and understand the impact they will have on our people,” he added
The job losses were mainly to come at its head office and across the group’s support functions, said Direct Line, which employs about 14,400 staff.
Direct Line said that “approximately 2,000 roles may become redundant”.
It added: “The group has begun consultation with staff and their representative bodies.”
The move comes after parent Royal Bank of Scotland launched a partial flotation of Direct Lane last October ahead of its proposed full sale of the unit by the end of next year.
RBS raised about £787 million from the sale of one third of Direct Line in an initial public offering.
The European Union had ordered RBS to sell Direct Line a British leader in the fields of motor and home insurance after the Scottish bank received massive amounts of state aid following the 2008 financial crisis.
RBS must cede control of Direct Line by the end of this year and must have divested its entire interest by the end of 2014.
RBS is 81 percent owned by the British government following a bailout that totalled £45.5 billion.