Less than five years after its ill-fated acquisition of ABN Amro and three years after its effective nationalization by the U.K. government, Royal Bank of Scotland Group has bowed to the inevitable and pulled the plug on its effort to become a full-service investment bank.
RBS announced on Thursday, January 12 that it would exit the equities, merger advisory, and corporate broking businesses and slash 3,500 jobs in its Global Banking and Markets division. Going forward, the bank will concentrate its capital markets activities solely on its core strengths of fixed-income trading and underwriting, and foreign exchange.
More broadly, RBS is responding to the general downturn in investment banking by trimming costs across the entire Global Banking and Markets division, which is led by CEO John Hourican. The moves will reduce the unit’s headcount to below 14,000 compared with 19,000 in the first half of 2011. The division will also reduce its balance sheet by 25 percent, to £300 billion ($460 billion) over the next three years, which will reduce its need for wholesale funding by £75 billion.....