RBS to slash 3,500 jobs in investment banking overhaul

The Royal Bank of Scotland has confirmed it will cut 3,500 jobs over the next three years as part of an overhaul of its wholesale banking business.

The restructure follows a review outlined in its third quarter results and comes in light of a changed market and regulatory environment. The state-owned lender said the changes are designed to help the bank make the transition towards ring-fencing requirements being legislated for UK banks.

The changes will see the reorganisation of RBS's wholesale businesses into ‘Markets’ and ‘International Banking’ and the exit and downsizing of selected existing activities.

As part of the process the bank is considering the sale or closure of its cash equities, corporate broking, equity capital markets, and mergers and acquisitions businesses. The combined divisions had an income of around £220 million in the nine months to September 2011 and are currently unprofitable.

RBS said it is in discussions with a number of potential buyers though there is no assurance of a sale concluding.

The Markets business will maintain its focus on fixed income, with strong positions in debt capital raising, securitisation, risk management, foreign exchange and rates. It will serve the corporate and institutional clients of all group businesses.

The Markets’ corporate banking business will combine with the international businesses of its Global Transaction Services arm into a new ‘International Banking’ unit designed to provide clients with 'one-stop shop' access to our debt financing, risk management and payments services. This business will be self-funded through its stable corporate deposit base.

The Markets’ balance sheet is targeted to reduce by around £120 billion from £420 billion as at 30 June 2011 over the three-year restructure period.  

The loss of the 3,500 jobs, which will be split between the bank's UK and non-UK locations, are in addition to  the 2,000 jobs which the bank cut in the second half of 2011.  

Commenting on the restructure RBS chief executive Stephen Hester (pictured) said: ‘We launched the RBS recovery plan in 2009 with strategic tests for the businesses that the group would retain. They would be restructured and managed to sustain strong, customer driven competitive positions, return more than their cost of capital, use a proportionate amount of group resources and be closely connected with each other.