RBS to shrink investment bank and cut 30,000 jobs: sources

Fri Feb 21, 2014 8:58am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Matt Scuffham

LONDON (Reuters) - Royal Bank of Scotland (RBS.L: Quote) is to shrink its investment banking and international operations as part of a revamp in which the group could shed up to a quarter of its 120,000 workforce, sources familiar with the matter said on Friday.

The part-nationalized bank has given in to demands from politicians that it focuses on lending to British households and businesses and maintains only a downsized investment banking business to service corporate clients, one source said.

Ross McEwan, who replaced Stephen Hester as CEO last October, will unveil the outcome of a strategic review of the business alongside the bank's full-year results on Thursday.

Shares in RBS - 81 percent-owned by the government after a 45-billion-pound ($75-billion) bailout in 2008 - were up 2 percent by 8.00 a.m. ET, outperforming a flat European banking sector .

Numis analyst Mike Trippitt said the plans were a positive development subject to restructuring costs and the impact on the bank's capital position.

"It has been clear for some time that the government has wanted RBS to retrench to a UK focused retail and commercial bank," he said.

RBS is under pressure to improve its capital position after Moody's placed its credit ratings on review for downgrade last week and Trippitt noted that a quarter of the group's assets, when adjusted for risk, are housed within the investment bank.

The bank said in January it expected to report a core Tier I ratio - a gauge of a bank's financial strength - of between 8.1 and 8.5 percent at the end of 2013 under full Basel III capital rules, below most rivals.   Continued...

 
A man walks past a Royal Bank of Scotland building in central London January 28, 2014. REUTERS/Paul Hackett