RBS to cut 3,500 jobs over 3 years

The Royal Bank of Scotland (RBS) plans to sell or close four of its business units as part of a worldwide restructuring program to cut costs and focus on its strongest divisions.

It is likely to axe 3,500 more investment banking jobs worldwide over the next three years, adding to the 2,000 or so posts that were cut last year.

However, the shake-up will probably have only a minimal impact on the group's Singapore unit, which focuses mainly on businesses it plans to keep, such as fixed income and currency trading.

RBS Singapore has about 2,000 employees.

As part of the restructure, RBS will make an exit from cash equities, corporate broking, equity capital markets, and mergers and acquisitions.

Industry experts say these segments represent only small businesses for RBS in Singapore, with probably with no more than a few dozen staff.

Those who spoke to The Straits Times said they are relieved as the restructuring is unlikely to affect them. The news came after rumors had already been swirling about the office for several days.

Worldwide, the four business units affected reported a combined income of about £220 million (S$440 million) for the nine months to September last year, and are unprofitable.

RBS said it is in talks with several potential buyers, "though there is no assurance of a sale concluding".

Reuters reported that Bank of China, Japan's Mizuho Financial, Britain's Oriel Securities and Australia's ANZ and Commonwealth banks are among those eyeing the units.

RBS' remaining wholesale banking businesses will be divided into two arms: "markets" and "international banking".

The markets business will focus on fixed income, debt capital raising, securitization, risk management, and foreign exchange and rates.

RBS' existing global banking and markets (GBM) division will be combined with the international businesses that are now under the global transaction services arm to form the new international banking division.

Both of the new units will be headed by John Hourican, currently the GBM chief executive.

"We took this decision because we want to prioritize our resources on those businesses where we are best with customers and can operate most profitably for shareholders," RBS said.

"Going forward, we will focus on our existing strengths in fixed income, foreign exchange, debt financing, transactions services and risk management solutions," the bank said.

RBS said it also plans to reduce its capital, and shrink those remaining businesses that are particularly reliant on high levels of capital.

The objective is for both its domestic and international corporate banking businesses to be wholly funded through deposits, the bank said.

Group chief executive Stephen Hester said the changes are driven by "significant new pressures" that have emerged in the wholesale banking industry.

Other major banks are also reportedly considering job cuts in a bid to manage costs and focus on core businesses.

Morgan Stanley is said to have slashed 10 posts in Singapore and Hong Kong on its fixed income sales and trading desks.

Sources told The Straits Times that Bank of America-Merrill Lynch had fired five people from its investment banking team. In addition, media reports say the bank is axing about a fifth of the managing directors in its Asia investment banking arm. (mtq)