The Royal Bank of Scotland (RBS) is to reduce its IT contractors' pay by 10 per cent at the end of this month, as the bank aims to save £1bn by the end of 2014.
The move, which affects 11,000 temporary staff, many of whom work in the bank's IT function, targets those contractors who earn more than £250 a day, while those supplied by consultancies will be exempt.
"We continually keep costs under review, in reaching this decision we have taken into consideration market day rates and those across the banking industry," said an RBS spokesperson.
Sources told efinancialcareers that RBS had told all of its contractors that it would be implementing the 10 per cent rate cut and that they have a week's notice period in order to decide whether to accept.
The cuts are part of the bank's wider initiative to cut costs; it aims to reduce its headcount by up to 40,000 in the next few years, and is targeting £5bn worth of savings by 2017.
In the summer of 2012, RBS suffered an IT glitch that left millions of customers unable to access their accounts. In an interview with Computing, RBS's chief analytics officer Alan Grogan explained that when the bank first noticed the issue "every technology person that could have been put on the project to resolve the issue" was working on it.
He said that RBS was "taught a lesson" by the fiasco, and that the bank was investing countless millions on its legacy, technology and data as a result.