RBS cuts 3,500 jobs at investment banking arm GBM
ROYAL Bank of Scotland today announced around 3,500 job losses over the next three years in a move to scale back its investment banking arm.
The cuts at RBS’s Global Banking and Markets (GBM) business, which has employees in Stoke, Manchester, Edinburgh and London, follows Government pressure for the 83% state-owned bank to pull back from its ambitions to be a global investment player.
GBM, which employs 18,900 worldwide, deals with a range of financial services such as debt advice, equity trading and mergers and acquisitions.
Its range of work with companies and governments spans from refinancing contracts for Anglian Water, Gatwick Airport and Tesco to debt issues for Finland.
The job losses come amid reports that John Hourican, the head of GBM who will continue to oversee the restructuring of the business, is in line to pick up �4million in long-term incentive shares that he was awarded in 2009.
The latest round of job cuts come on top of 2,000 losses announced last summer. The latest redundancies will mean that nearly 11,000 posts have been cut at GBM from the pre-banking crisis headcount of 24,000.
RBS said the strategy was designed to help move toward the ring-fencing requirements outlined by the Independent Commission on Banking and adopted by the Government last year.
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The recommendation called for banks to ring-fence their retail, or high street, operations from their riskier investment banking divisions.
David Fleming, national officer at the union Unite, said RBS’s decision to reduce the headcount at GBM was “staggering”.
“It is a disgrace that while on a daily basis stories are emerging about the massive bonuses at the top of the bank, increasing numbers of jobs are being cut from amongst the hard-working staff,” he said.
RBS also said today it was considering the sale of its corporate broking arm, renowned City broker Hoare Govett, which offers independent market advice to 100 listed companies, including 11 of the FTSE 100 index.
Hoare Govett was acquired as part of RBS’s disastrous �48billion joint bid for Dutch bank ABN Amro in 2007.
Last month, a long-awaited Financial Services Authority report said RBS was brought to its knees by “multiple poor decisions” and its “gamble” on buying ABN Amro.
The FSA blamed deficiencies in the management and culture at RBS prior to its �45.5billion Government bailout and called for tougher rules to make bankers more accountable for their actions.