RBS says no big job cuts coming as investment bank to shrink

Royal Bank of Scotland Group PLC CEO Ross McEwan moved to reassure employees that there will be “no big announcement” on job cuts when the lender publishes the results of its strategic review next week. More

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RBS says no big job cuts coming as investment bank to shrink

Posted 2/21/14

LONDON – Royal Bank of Scotland Group PLC CEO Ross McEwan moved to reassure employees that there will be “no big announcement” on job cuts when the lender publishes the results of its strategic review next week.

“This type of thing is frustrating and unsettling,” McEwan, 56, wrote in a memo to employees on Friday. “This has been building over recent weeks and months and was always to be expected ahead of our strategy update.”

McEwan, who replaced Stephen Hester as CEO in October, will next week detail his plan to shrink RBS’s investment-banking and overseas units to focus on consumer and commercial banking in Britain, according to a person with knowledge of the matter who asked not to be identified before the announcement. The overhaul will lead to job losses over the coming years, the person added.

Britain’s largest state-owned lender will shrink by 30,000 as businesses including its U.S. bank and some British branches are spun off and jobs are cut, the Financial Times reported Thursday, citing people it didn’t identify. The bank will also pull out of dozens of the 38 countries in which it retains a presence, Sky News reported earlier on Friday.

RBS rose 1.2 percent to 360.1 pence in London trading.

‘Lloyds-like’

The government, which owns 80 percent of RBS, has been pushing the lender to focus on U.K. consumer and corporate banking as it tries to recoup some of the 45.5 billion pounds ($76 billion) it spent bailing out the company five years ago. Hester departed in June after the government pressed him to shrink the securities unit, and five months later, RBS set up an internal bad bank in an effort to speed up the cleaning up of its balance sheet.

Lloyds Banking Group PLC, the country’s biggest mortgage lender, whose investment banking operation is a fraction of the size of RBS’s, has climbed 50 percent in London in the past 12 months. RBS has gained about only 4 percent, and the stock is still trading below the price at which the government could sell its stake without incurring a loss. The Treasury is preparing to sell a second stake in Lloyds in coming months.

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