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RBS mulling huge investment bank jobs cull

Last updated: 08:21 05 Jan 2012 GMT, First published: 09:21 05 Jan 2012 GMT

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State-owned  Royal Bank of Scotland (LON:RBS) is mulling up to 10,000 job cuts in a widespread restructuring of its investment bank operations, according to reports today.

The cuts would affect more than half of the 19,000 staff at RBS’s investment bank and are part of plans being drawn up by chief executive Stephen Hester to scale back the division drastically, the FT reported.

The bank recently appointed Lazards to find a buyer for stockbroker subsidiary Hoare Govett and the equities operations in the US and Australia.

Today’s report suggested it is also poised to pull back from wider European investment banking to focus just on London, Paris and Frankfurt. 

The possible restructuring would cost between £1bn-£2bn, although is still said to be considered a worst case scenario in the event that RBS cannot dispose of the operations concerned.

Once the restructuring is complete, RBS will focus on its traditional UK retail and corporate financing bank activities. Analysts expect more details to be disclosed on 23 February along with RBS’s annual results.

Only last month, UK chancellor George Osborne told the 83% UK taxpayer-owned bank that it needed to scale back on its risk exposure.

Oriel Securities said the job cuts were double the previously rumoured 5,000 reduction, but given the chancellor’s remarks, the impact of the capital requirements of Basel III and the Independent Commission on Banking’s recommendation on ring-fencing, RBS has little choice but to reduce substantially the size of its investment bank business.

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