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MORE than 6,000 jobs will go at the Royal Bank of Scotland Group if its record-breaking 48 billion bid for the Dutch bank ABN Amro is successful.

The cuts would come from Edinburgh-based RBS’s global banking division, which has staff in London, mainland Europe, the United States and Asia-Pacific.

The organisation made the prediction yesterday as it announced details of its bid - the biggest in the history of banking - as part of a consortium with Belgium’s Fortis and Banco Santander of Spain.

Union leaders from more than a dozen countries will meet on Monday to discuss the impact of the takeover move, which is based on making almost 3 billion in cost savings. “Thousands of staff around the world are caught in the middle of this takeover battle and are watching with growing uncertainty,” said Rob MacGregor, of the banking union Unite.

The RBS consortium has been rebuffed by ABN Amro’s management in favour of an offer from British rival Barclays. But the RBS bid is 3 billion higher than Barclays’ - and it has pledged fewer overall job losses.

A spokeswoman for RBS said a successful bid by its consortium would result in about 20,000 job losses globally, split equally between the three companies. That would leave each of the banks looking at 6,660 job cuts, which RBS hoped would be absorbed by natural turnover and redeployment.

The spokeswoman claimed a winning Barclays bid would result in 23,000 job cuts, of which about 12,000 would come as a result of “offshoring” posts from the UK and the Netherlands. She went on: “We are not able to give an indication of exactly where the affected [RBS] jobs would be, but the only cuts would be in areas where there is overlap with ABN Amro, and that would almost certainly exclude our headquarters in Edinburgh.

“In terms of UK jobs, the global banking division is mostly in the City of London.”

If the consortium’s bid is accepted, RBS, which has nearly 140,000 staff worldwide, will be pushed further up the global league. It is already the second-largest bank in Europe, and the fifth-largest in the world by market capitalisation. It is also the 14th largest company in the world, according to the Forbes Global 2000 rankings.

The RBS spokeswoman said: “Job cuts must be seen in the context of our position in the industry. After the acquisition of NatWest in 1999, we [absorbed] 97 per cent of the 18,000 job losses through redeployment and the creation of new opportunities.”

Mr MacGregor said: “Unions from at least a dozen countries will be meeting at the Unite headquarters on 4 June to develop a cross-border, co-ordinated response to the attempts to acquire ABN Amro. Unite is calling on all parties to provide more details on how the consortium intends to make its projected 2.87 billion cost savings.

“The workforce expects all parties to operate with transparency, to provide them with timely and accurate information and communicate regularly.”

At a news conference in London yesterday, Sir Fred Goodwin, the RBS chief executive, said: “There will be UK job losses as a result of these proposals - it just depends how much of the business we keep here and how much we move to Amsterdam.”

He said the proposed bid would help RBS to achieve its strategy of increasing overseas revenues: if the deal went ahead, 54 per cent of its operating profits would come from overseas, against 42 per cent in 2006.

He was also keen to highlight the advantages of adding ABN Amro’s corporate banking operation to the business, as well as combining the Dutch bank’s LaSalle arm with RBS’s Citizens operation in the US. He said: “This does not just move us into the premier league, but to the top of the premier league.”

Many ABN Amro shareholders are thought to prefer the informal offer of the consortium, which is higher and partly in cash: the Barclays offer is a share swap.

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http://business.scotsman.com/topics.cfm?tid=837

Treasury debt prices fell Tuesday, as data showing unexpected strength in the service sector supported the view of a rebound in second-quarter economic growth and pushed short-term yields to 5%.

A strengthening economy would probably deter the Federal Reserve from cutting interest rates this year, a growing view that led to heavy selling of Treasury debt in recent weeks.

“The market is going to probe lower until we find resistance,” said Dan Shackelford, a portfolio manager at T. Rowe Price. “If the Fed is going to be on hold, bonds at 5% looks pretty rich.”

The two-year yield, which is the most sensitive to changes in the market’s Fed outlook, reached 5% for the first time since January.

The benchmark 10-year note shed 11/32 in price to yield 4.98%, up 5 basis points from late Monday. Bond yields move inversely to prices.

Treasuries succumbed to early downward pressure amid negative sentiment toward bonds in overseas markets. Selling intensified after the service sector data from the Institute for Supply Management showed a surprise surge in business last month, undermining expectations of a rate cut this year by the Fed.

The ISM services index rose to 59.7, its best showing since April 2006 and above the highest market forecast.

The recent strong economic data, led by Friday’s May nonfarm payroll reading, have caused some of the staunchest Wall Street economists to scale back their forecasts of Fed rate cuts this year.

On Tuesday, Goldman Sachs dropped its forecast for the Fed to pare rates by 75 basis points this year. Merrill Lynch on Friday abandoned its call for the Fed to ease the benchmark federal funds rate to 4.25% by year-end.

Meanwhile, Fed Chairman Ben Bernanke was just balanced enough in his housing outlook to deprive the market of a catalyst to shake it out of its slump.

Bernanke said the housing slowdown would act as a drag on the economy for longer than first thought, but he balanced those comments with warnings on inflation, reinforcing bond investors’ concerns.

Born into a family of business owners, I think I probably have the kind of gene pool that encourages you to build your own company. Initially, however, my parents wanted me to take a different career track. Hence, after completing my masters in engineering and economics, I ended up in the corporate world. My last employer was Siemens («www.businessweek.com») in Austria, where I was working as project manager. For Siemens, I worked all over the world, including in China, Australia, Russia, Ukraine, and also the U.S., where I stayed for three years on a management assignment. One of my personal goals was to get an MBA, but my job involved a lot of traveling and interrupting my career was not an option. Taking the International Executive MBA at offered great possibilities and gave me the opportunity to think about making a move in the direction of the family calling.

Every student at IE had to complete a business plan as part of a team, and that’s when I met my current business partners. We started to develop our venture idea while in school. As traveling business people we were always frustrated by the food you get when you want a quick bite while on the move. There is nothing healthy available and sometimes it’s of really poor quality. So we thought: Why not provide something tasty and healthy as well as convenient? Moreover, Im from a small village in Austria where everything is fresh and organic without making a issue out of it. Being addicted to the outdoors, a healthy and environmentally sound lifestyle came naturally to me. And it was against this backdrop that the idea kept growing.

Here’s a typical workday:

6:30 a.m.—I wake up before the sound of the alarm clock to my 8-month-old son talking or crying. I get up and go for a run—physical activity is an integral part of my daily schedule. Than I eat breakfast with my wife and use this time to play with our son. The morning is the only time I can spend time with him during the working week.

8:55 a.m.—I arrive at the office and check in with those already there. After working 12 years as a senior manager it’s been quite a change. Currently we employ four people, and the number is growing monthly as we prepare to launch in October. Right away I turn on my laptop and answer the first e-mails of the day. After that, I take about 15 minutes to review industry-related feeds and newsletters.

10:00 a.m.—My first meeting is with the accountant to review the financial update. As usual, we meet in his office — I like to talk to people in their own work area. This time we also talk about the future format for the monthly cost-controlling report he is working on.

10:45 a.m.—After the meeting I start my daily telephone sessions. Today the calls are mostly connected to lobbying activities for our business, which is based in Charlotte, N.C. We’re in the food retail business and will be providing healthy “on-the-go” food to busy, health-conscious people in a convenient way — in the food retail industry we would be…

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(AP)Documents indicate eight congressional leaders were briefed about the Bush administration’s terrorist surveillance program on the eve of its expiration in 2004, contradicting sworn Senate testimony this week by Attorney General Alberto Gonzales.

The documents, obtained by The Associated Press, come as senators consider whether a perjury investigation should be opened into conflicting accounts about the program and a dramatic March 2004 confrontation leading up to its potentially illegal reauthorization.

A Gonzales spokesman maintained Wednesday that the attorney general stands by his testimony.

At a heated Senate Judiciary Committee hearing Tuesday, Gonzales repeatedly testified that the issue at hand was not about the terrorist surveillance program, which allowed the National Security Agency to eavesdrop on suspects in the United States without receiving court approval.

Instead, Gonzales said, the emergency meetings on March 10, 2004, focused on an intelligence program that he would not describe.

Gonzales, who was then serving as counsel to Bush, testified that the White House Situation Room briefing sought to inform congressional leaders about the pending expiration of the unidentified program and Justice Department objections to renew it. Those objections were led by then-Deputy Attorney General Jim Comey, who questioned the program’s legality.

“The dissent related to other intelligence activities,” Gonzales testified at Tuesday’s hearing. “The dissent was not about the terrorist surveillance program.”

“Not the TSP?” responded Sen. Charles E. Schumer, D-N.Y. “Come on. If you say it’s about other, that implies not. Now say it or not.”

“It was not,” Gonzales answered. “It was about other intelligence activities.”

A four-page memo from the national intelligence director’s office shows that the White House briefing with the eight lawmakers on March 10, 2004, was about the terror surveillance program, or TSP.

The memo, dated May 17, 2006, and addressed to then-House Speaker Dennis Hastert, details “the classification of the dates, locations, and names of members of Congress who attended briefings on the Terrorist Surveillance Program,” wrote then-Director of National Intelligence John Negroponte.

It shows that the briefing in March 2004 was attended by the Republican and Democratic House and Senate leaders and leading members of both chambers’ intelligence committees, as Gonzales testified.

Bush acknowledged the existence of the classified surveillance program in December 2005 after it was revealed by The New York Times. In January, it was put under the authority of the Foreign Intelligence Surveillance Court for judicial review before any wiretaps were to be approved.

Asked for comment on the documents Wednesday evening, Justice spokesman Brian Roehrkasse said Gonzales “stands by his testimony.”

“The disagreement referenced by Jim Comey in March 2004 was not about the particular intelligence activity that has been publicly described by the president,” Roehrkasse said. “It was about other highly classified intelligence activities that have been briefed to the intelligence committees.”

The disagreement over whether to renew the program led to a dramatic, and highly controversial, confrontation between Gonzales and then-Attorney General John Ashcroft on the night of March 10, 2004.

After briefing the congressional leaders, Gonzales testified that he and then-White House chief of staff Andy Card headed to a Washington hospital room, where a sedated Ashcroft was recovering from surgery. Ashcroft had already turned over his powers as attorney general to Comey.

Comey was in the hospital room as well, and recounted to senators in his own sworn testimony in May that he “thought I just witnessed an effort to take advantage of a very sick man, who did not have the powers of the attorney general because they had been transferred to me.”

Ultimately, Ashcroft sided with Comey, and Gonzales and Card left the hospital after a five- to six-minute conversation.

Gonzales denied that he and Card tried to pressure Ashcroft into approving the program over Comey’s objections.

“We never had any intent to ask anything of him if we did not feel that he was competent,” Gonzales told the Senate panel Tuesday. “At the end of his description of the legal issues, he said, ‘I’m not making this decision. The deputy attorney general is.’ And so Andy Card and I thanked him. We told him that we would continue working with the deputy attorney general and we left.”

Democrats and Republicans alike expressed disbelief at Gonzales’ version of events.

A path leads around Bwlchwernen Fawr farm, through the fields and past a wood that is home to kites, buzzards and tawny owls. The trail twists at a stream feeding the river Aeron before bubbling underground beside a badger sett which local schoolchildren are encouraged to visit.

To outside eyes, Bwlchwernen, in West Wales, appears to be an idyll of peace and tranquillity. From the inside, however, it is anything but.

‘I’m not normally apocalyptic,’ said Patrick Holden, owner of the farm and director of the Soil Association. ‘But the organic food industry is facing big problems that need to be sorted out as a matter of urgency.’

Figures to be released this week will reveal that the organic industry is in grave danger of becoming a victim of its own success. The public hunger to shop ethically, locally and sustainably - a phenomenon that reached its acme with the high-profile opening last month of the American Whole Foods Market in London’s Kensington High Street - is eating up British crops faster than farmers can produce them. The organic sector’s success is creating problems that could end up irrevocably damaging consumer confidence in organic food.

Despite breaking through the 1bn a year barrier, the growth in sales of organic food in the past year has dramatically slowed. Experts have no hesitation in identifying the problem as an increasing shortage in local supply.

According to the TNS Worldpanel figures, revealed in the Grocer magazine, sales of organic foods were up 9.3 per cent to 1.03bn in the year to 25 March. While this is impressive , it is well below the 17 per cent growth of the previous year.

‘Retailers have been instrumental in the growth of the organic sector,’ says Richard Hogg, marketing director at Duchy Originals, Prince Charles’s upmarket food producer. ‘By positioning organic produce within mainstream product offerings, consumers now recognise the breadth of the organics sector. However, the biggest challenge over the coming year will be the industry’s ability to continue to source quality organic raw materials to meet this increased demand.’

Greg Parsons, marketing controller in the liquids department at Dairy Crest, agrees: ‘Growth is being hindered by a shortage of supply, particularly in dairy, meat and farmed produce. There’s a fine balance between supply and demand, and the problem is being exacerbated by rising demand for organics while supply lags increasingly far behind.’

He says that such is the growth in demand for organic milk and dairy products that UK suppliers cannot keep up.

The lack of British-grown produce recently forced Asda to place an advertisement in Farmers Weekly, begging organic fruit and vegetable producers to get in touch. But such solutions are not a genuine answer to the gap in local supply, which can only be bridged by importing foreign produce.

‘Our growth has been constrained by the lack of raw materials,’ says Helen Browning, supplier of an organic sausage range and food and farming director at the Soil Association.

‘There’s a real shortage of supply, so we’ve had to import some of our pork from Sweden. I’ve no doubt that this year’s results will show that a higher volume of imported product came into the UK.’

Speaking to the Grocer, Renee Elliott, founder of Planet Organic, admits to struggling with a similar problem: ‘Our use of imports depends on the category. We could get all our meat from the UK, but not all our grocery and fruit and veg because it just isn’t grown here.’

But importing is not a satisfactory solution in either the short or the long term. ‘Research has shown that one of the things consumers look for is a “Made in Britain” label,’ says Richard Cullen, research and insight manager at the Meat and Livestock Commission.

Cullen points out that although the organic market is still pretty strong, one of the things holding back growth is a lack of UK farm conversions. And the one thing holding back conversions, he adds, is the cost of organic farming.

The statistics prove he has a point. Organic pigs, for example, cost 80 per cent more to rear than ordinary ones because of the cost of their feed, which is higher because it too is in short supply. The situation could worsen because food flown into the UK might lose its organic status under proposals being considered by the association, which certifies organic producers in Britain and around 30 other countries.

The association is consulting interested parties on whether to introduce restrictions on produce imported by air in a bid to cut carbon dioxide emissions. Other suggestions include requiring food to carry labels detailing the air miles it has travelled, or insisting that all flights be carbon offset.

Although the growth of organic imports worries some UK consumers, campaigners say it is helping farmers in the developing world, who rely on British customers. More than one million people in Africa depend on the trade supplying fresh fruit and vegetables to this country.

Ian Bretman, deputy director of the Fairtrade Foundation, says: ‘The voices of people from developing countries who depend on exporting food must be heard. There should be a balance between environmental impact and the sustainability of a product.’

But the organic sector faces another problem, said Holden from his farm near Lampeter. Last week, after more than 30 years in organic farming, he was sacked by Sainsbury’s as a supplier for not reaching the supermarket’s ‘quality standard’. Holden had the comfort of being in the rarefied company of Prince Charles, whose contract with Sainsbury’s was terminated for a similar reason.

Holden says his experience exposes an industry in grave danger of becoming a victim twice over - it is a casualty of its own success and suffers from demands placed on it by the larger retailers intent on guaranteeing quality.

‘There is a damaging gulf growing between demand and supply for local, organic produce. But the issue is exacerbated by the fact that supermarkets are unintentionally making it impossible for small farms to supply them,’ he says.

‘Sainsbury’s has made buying local a key part of its recent marketing to eco-conscious customers and - to be fair - they have done more than most of the other supermarkets. But while all supermarkets are preaching localism, most of what they actually do is just tokenism. Their systems are still going in the opposite direction to their professed ideology - and it’s disastrous.’

But even dedicated supporters of the organic industry admit it’s not a simple tale of ’small retailers are good and big retailers are bad’. Farm shops and traditional delicatessens might fear being forced out of business by the active mimicking of supermarkets such as Waitrose, who are revamping their shops to offer the same speciality and locally sourced foods as small local shops. Nevertheless, most of those in the organics industry praise the efforts of the big players.

‘Some farmers might be sceptical about supermarkets’ commitment to sourcing UK produce,’ says Robin Maynard, of the Soil Association. ‘But the statistics support it: whereas in 2002, only 30 per cent of primary organic produce was UK-sourced, now nearly 70 per cent of organic foodstuffs sold in supermarkets that can be grown in the UK are sourced here.’

Our hunger for organics

McDonald’s announced last week that by the end of this month all the milk used in the tea and coffee it sells in its 1,200 restaurants in the UK will come from organic British cows.

Only 66 per cent of organic produce in supermarkets is British.

Organic food sales have exceeded the 1bn a year mark in the UK for the first time. Sales were up 9.3 per cent on the previous year. Organic milk was up 19 per cent, alcohol rose 13.6 per cent and meat, fish and poultry were up 11.5 per cent.

More than 20 million households bought organic goods last year. London and the south-east of England accounted for 43 per cent of sales.

Organics make up just 0.7 per cent of the food and drink market.