RBS to cut 3,500 jobs; Hoare Govett up for sale

The Royal Bank of Scotland (RBS) today announced its plan to cut 3,500 jobs as part of a reorganisation of its investment bank, which will see the sale or closure of the equities and corporate broking divisions.

The bank, which is 83% owned by the taxpayer, will split job cuts between its UK and international offices. The move follows 2,000 job losses which were announced earlier. As many as 10,000 job cuts had been forecast in total.

In a statement released this morning, RBS said it is considering selling or closing unprofitable parts of the business including cash equities, corporate broking (Hoare Govett), equity capital markets, and mergers and acquisitions.

Discussions with a number of potential buyers have been ongoing but no firm offers made.

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

"We intend to retain our leading investor products business internationally in equity and fixed income derivatives. This business is both profitable and provides valuable funding for RBS."

RBS' wholesale banking division, which provides services to large clients including investment banking services, will be split into separate "markets" and "international banking" divisions.

Group chief executive Stephen Hester said: "We launched the RBS recovery plan in 2009 with strategic tests for the businesses the group would retain. This strategy has succeeded in making RBS stronger and placing us on the road to long-term success.

"But for our strategy to be effective, it must adjust to fresh challenges. And it is clear that, particularly in the wholesale banking arena, significant new
pressures have emerged.

"The changes we are announcing today seek to ensure that RBS is at the front of the pack in pursuing a strategy that reflects the environment we expect to operate in."

The moves follow calls from Chancellor George Osborne last month for the bank to shrink its global banking and markets division to reduce risk.

Osborne said on Wednesday: "I certainly have been clear in my view RBS should scale down its global investment banking activities and become a much more UK - and Europe - focused retail bank, where the investment banking primarily supports the retail bank."