RBS ditches investment bank in fresh jobs cull
By Steve Slater
LONDON (Reuters) - Royal Bank of Scotland abandoned ambitions to be a top global investment bank and said it would cut another 4,450 jobs as it bows to pressure from the UK government to shut down risky operations and prepare for tougher international regulations.
Britain owns 83 percent of Britain's fifth biggest bank after pumping in 46 billion pounds to keep it from going under during the financial crisis and the country's taxpayers are currently sitting on a 24 billion pound loss.
The government has demanded that RBS shrink its investment bank further, despite the bank already halving that part of its business over the last three years.
RBS will now stop trading shares and advising companies on takeovers, both loss-making businesses, in arguably the starkest retreat by a big investment bank as the financial crisis and tough new rules hit profits across the industry.
RBS said it is cutting 3,500 jobs in its investment bank and will exit cash equities, corporate broking, equity capital markets and mergers and acquisitions businesses. The cuts come on top of 2,000 at the investment bank in the second half of 2011 and account for more than a quarter of the unit's staff.
In total the bank has cut 34,000 jobs since Chief Executive Stephen Hester was brought in to turn the bank around when it was bailed out in 2008. The Unite trade union said that 22,000 of those jobs were in the UK alone.
RBS aims to cut the balance sheet of its former global banking and markets business by 120 billion pounds ($184 billion) to 300 billion in the next three years.
Its plan equates to shedding 75 billion pounds in risk-weighted assets and is being mirrored by other banks attempting to become leaner and more focused. Continued...