Royal Bank of Scotland (RBS) is planning to cut about 3,000 jobs in its investment banking division as the bank braces for a tough year.
Business | Banking
RBS plans to lay off 15% of its investment bankers
Royal Bank of Scotland (RBS) is planning to cut about 3,000 jobs in its investment banking division as the bank braces for a tough year.
- By Jennifer Hughes and Peter Thal Larsen, Financial Times
- Published: 23:41 November 15, 2008
The cuts, equivalent to about 15 per cent of the workforce of RBS' investment banking division, come as rival banks are planning similar cutbacks in response to the slowdown in financial markets.
Nevertheless, the cuts are a further indictment of RBS's previous strategy, most notably its participation last year in a hostile break-up bid for ABN Amro, the Dutch lender.
The 71 billion euro (Dh330 billion) deal boosted RBS's investment banking operations just as markets were beginning to seize up.
The move comes as Stephen Hester, RBS's new chief executive, embarks on a fundamental review of the bank's operations in an effort to shrink the size of its balance sheet.
RBS is expected to report a loss this year, largely because of heavy write-downs on leveraged loans and other complex debt securities on its balance sheet.
The bank is under pressure to scale back riskier and more capital-intensive activities after raising £20 billion (Dh109 billion) in fresh capital as part of the UK government's rescue of the banking system. The bailout could give the state a near-60 per cent stake.
The bank would not confirm details of the cuts, which came as no surprise in the current market climate.
"We constantly review our business model to make sure its is appropriate for the market conditions," RBS said.
The cuts are expected to fall relatively evenly across the division, which operates in 50 countries, as a result of a general retrenching rather than any decisions to get out of some business lines entirely.
The cuts will not affect RBS's retail banking operations.
The bank employs about 170,000 staff in total.
RBS had previously cut about 7,000 jobs, largely in its investment banking arm, as part of the integration of ABN Amro.
The move comes as banks around the globe are trimming their investment banking divisions as a result of the slowdown.
Last week, Morgan Stanley said it planned to chop about 2,000 jobs, or four per cent of its workforce.
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