RBS to cut 3,500 jobs in three-year shake-up - UPDATE
As expected, part nationalised lender Royal Bank of Scotland (RBS) has revealed a massive shake-up to its investment banking and wholesale businesses, including a mass employment reduction of 3,500.
As expected, part nationalised lender Royal Bank of Scotland (RBS) has revealed a massive shake-up to its investment banking and wholesale businesses, including a mass employment reduction of 3,500.
The changes - which include an exit from its cash equities business, corporate broking, equity capital markets and its mergers and acquisitions unit - will start immediately and take up to three years.
The group's Chief Executive Stephen Hester said: "Our goal from these changes is to be more focussed for customers, more conservatively funded, more efficient and with better, more stable returns for shareholders overall."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Significant reductions in balance sheet, funding requirements and cost base in the remaining wholesale businesses will be implemented, the group said in a statement on Thursday morning.
As part of its "recovery plan" put in place in 2009, the bank has already reduced its balance sheet by £600bn and "rebuilt capital ratios that place us among our strongest international peers," Hester said.
RBS's Global Banking & Markets (GBM) and Global Transaction Services (GTS) divisions will be restructured. GBM's corporate banking business will now merge with the international business of GTS to create a new 'International Banking' unit which it says will provide a "one-stop shop" for clients' debt financing, risk management and payments services. GTS's domestic small and mid-size corporates will now be managed within Ulster Bank and Citizens Financial, the bank's domestic corporate banking businesses in Ireland and the US, respectively.
GBM's funded balance sheet is expected to reduce from £420bn (at 30 June 2011) to £300bn by the end of the three-year implementation period. Some 2,000 staff had already been offloaded in the GBM division in the second half of 2011.
"The revised wholesale strategy and structure is designed to help transition RBS toward ring-fencing requirements being legislated for UK banks," the firm said.
The cash equities business, corporate broking, equity capital markets and mergers and acquisitions unit are to be sold. These had a total income of £220m in the first nine months of 2011 and did not make a profit. RBS is already in discussions with potential buyers.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
8 of the best houses for sale with libraries
This week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
By Natasha Langan Published
-
Investors pull money from UK equities as government warns of “painful” Budget
The government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
By Katie Williams Published