RBS to shed 3,500 investment banking jobs
Thursday, 12 January 2012 09:44
The Royal Bank of Scotland will cut 3,500 jobs as part of a reorganisation and reduction in size of its investment bank.
Most of the cuts are expected to happen this year. The move follows comments from the Chancellor, George Osborne last year recommending that RBS investment bank division should shrink. RBS is 83 per cent owned by the UK taxpayer.
Mr Osborne told parliament in December: "Investment banking will continue to support RBS's corporate lending business but RBS will make further significant reductions in the investment bank, scaling back riskier activities that are heavy users of capital or funding."
The losses will be split between UK and international employees and comes on top of 2,000 job losses announced last year in its investment banking service and the loss of 30,000 employees in total over the last two years, 22,000 of them from the UK.
The re-organisation of the banks’ investment division will involve it being split into separate international banking divisions that service large clients via its wholesale banking division. This will include some services transferred over from its investment banking division such as issuing bonds, cash management and a payments service.
The markets, which comprise the main trading activities of RBS will concentrate on core banking activities such as currency transactions, many markets and debt. The bank will also sell its corporate brokerage business, Hoare Govett and other business lines including mergers and acquisitions that had been expanded upon by RBS during the leadership of former chief executive Sir Fred Goodwin.
RBS plans to reduce the size of its balance sheet by more than 25 per cent from £420 billion to around £300 billion over three years to reduce its borrowing requirement from wholesale money markets.
This should help reduce risks and allow RBS to make a profit and lower the loss to the UK taxpayer, currently sitting at £26 billion from an investment of £45.5 billion.
The restructuring will also enable the bank to prepare for new UK regulatory reforms being introduced as a result of the recommendations of Sir John Vickers Independent Commission on Banking which will require banks to ring-fence retail banking operations from riskier investment banking business.
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