RBS To Axe 3,500 Investment Banking Jobs

BethPH
By BethPH Last edited 79 months ago
RBS To Axe 3,500 Investment Banking Jobs


Royal Bank of Scotland is poised to make cuts to its investment banking division which could see more than 3,500 jobs lost in London.

The bank, which has been 84% owned by the government since 2008 when it received a £45.5 billion bail-out to prevent a Lehman-like failure, will be exiting cash equities, corporate broking, equity capital markets and mergers and acquisitions businesses. The change to the bank's strategy was announced last year by Chancellor George Osborne and expected to be confirmed later today:

"Investment banking will continue to support RBS's corporate lending business but RBS will make further significant reductions in the investment bank, scaling back riskier activities that are heavy users of capital or funding."

The announcement in December came at the same time as plans to ring-fence retail banking from investment banking were revealed. Although the Chancellor implies that the areas to be cut are more risky, it's worth remembering that RBS got into trouble through their debt business rather than equities, as the BBC's Robert Peston points out. So despite the spin, RBS's scaling back on some areas wouldn't prevent another financial crisis or see an end to high salaries and bonuses, and redundancies won't be confined to the trade floor; support staff will also be affected.

London-based broking firm Tullett Prebon laid off 80 traders last week in a cost-cutting drive while UBS announced in August last year that it planned to cut 3,500 jobs - over half of those in investment banking. Nomura, BNP Paribas and Bank of America Merrill Lynch have all shed staff along with Canary Wharf-based Citigroup.

The Chancellor's announcements are the latest in a series of attempts to be seen to be clamping down on the financial sector, although business secretary Vince Cable spoke out last year against the effect on London of a financial transactions tax.

Last Updated 12 January 2012