THE CHIEF executive of taxpayer-owned Royal Bank of Scotland has confirmed that the organisation will continue to close branches and shed staff for the foreseeable future as it makes the transition to a more digitally focused bank.

RBS also confirmed that it is making headway on plans to shift some operations to Amsterdam as a contingency for continuing to serve European customers following the UK’s exit from the European Union.

Noting that the group has committed to taking out £2 billion of costs by the end of 2020, Ross McEwan said he would be “surprised if that doesn’t involve reductions in staff”.

“To get this bank back into good competitive shape and in terms of what is going on in the marketplace towards much more technology and less physical activity, we’ve seen 250 branches close because activity has been more focused on mobile and other digital channels,” Mr McEwan said. “We see that continuing as a trend in the next five years.”

He added that the change is being accelerated because “customers are looking to do things quite differently”, with the way people access bank services “changing dramatically”.

“That’s where a lot of our investment needs to go,” he said. “That doesn’t mean we won’t have a large branch network, just that it won’t be as large as it has been.”

The bank has established a technology and innovation committee to help lead its expansion into digital, with non-executive director Alison Frank as its chair. Fellow non-execs Frank Dangeard and Yasmin Jetha will also sit on the committee.

The knock-on impact of branch closures made a positive impact on the bank’s results for the first half of 2016, with a reduction in overall staff numbers of 14,200 shaving £288 million off costs.

That brought the total that the Royal Bank spent on staff during the first six months of this year down to just over £2bn for 75,000 people. It also reduced its spend on property by £217m.

This contributed to the bank achieving an attributable profit figure of £939m in the first half, up from a loss of £2bn in the same period last year.

While Mr McEwan warned that the bank could slip back into loss-making territory in the second half of the year, chairman Howard Davies said the board is “pretty pleased with the progress the management are making at returning the bank to sustainable profitability”.

Accepting that the bank “still has some issues ahead, particularly with costs”, Mr Davies added that it has “made significant progress” on three of the four main problems that dogged it at the beginning of this year.

Specifically, he said it had agreed to settle a $5.5bn claim with America’s Federal Housing Finance Agency in relation to mortgage bonds sold to Fannie Mae and Freddie Mac between 2005 and 2007 in addition to settling all but one outstanding claim related to its 2008 rights issue.

The bank spent a total of £396m on litigation and conduct costs in the first half of the year, £151m of which related to the FHFA settlement while £25m was associated with the rights issue litigation.

Mr Davies added that while the bank’s plan to hold on to its Williams and Glyn arm is yet to receive final sign off from the European Commission’s College of Commissioners, that is “just a legal formality” because the move has already been okayed by competition authorities.

He said that means the US Department of Justice’s ongoing investigation into Royal Bank over its sale of residential-mortgage backed securities is the only one of the four legacy issues “that have hung over the bank for far too long” to remain.

“We continue to hope to resolve that this year if possible, but there is no progress on that to report,” Mr Davies said.

Royal Bank, which was bailed out by the UK Government in 2008, remains three-quarters owned by the state.