RBS May Cut About 7,000 Investment Banking Jobs, People Say
By Ben Livesey
April 28 (Bloomberg) -- Royal Bank of Scotland Group Plc, Britain's second-largest bank, may cut about 7,000 jobs following the acquisition of ABN Amro Holding NV's securities unit and credit market losses, said two people with knowledge of the plan.
``Since the acquisition of ABN Amro we have consistently said that as we brought our two wholesale banking businesses together there would be job losses over the course of the next two years,'' the company said in a statement today. ``In light of current conditions in some parts of the global credit markets we are also looking at the appropriate size for our businesses affected by this downturn.''
Edinburgh-based RBS is reviewing all jobs in its global securities and corporate lending unit, and the biggest reductions will likely be made in the enlarged debt trading and corporate lending businesses, said the people, who declined to be identified because the matter is confidential. The job cuts would amount to almost 25 percent of the more than 28,000 people at the division.
For RBS, ``this is more than just normal integration of two businesses,'' said Mike Trippitt, a London-based analyst at Oriel Securities Ltd. who has a ``hold'' rating on the stock. ``These businesses, even if they hadn't been merged, would be making job losses. Credit businesses and asset-backed businesses are going nowhere.''
RBS rose 3.25 pence, or 0.9 percent, to 352.25 pence by 11:29 a.m. in London trading. The stock has fallen 21 percent this year, compared with the 13 percent decline in the Bloomberg Europe Banks and Financial Services Index.
The planned cuts were reported earlier today by the Financial Times.
Record Takeover
Chief Executive Officer Fred Goodwin announced plans last week to raise 12 billion pounds ($23.9 billion) and sell RBS's insurance operations after the ABN Amro acquisition and the credit crisis depleted capital. Banks and brokerage firms around the world have gotten rid of about 49,000 jobs in the past 10 months as revenue from fixed income and investment banking tumbles.
Last year, RBS led Spain's Banco Santander SA and Fortis in the three-way, 72 billion-euro ($113 billion) acquisition of Amsterdam-based ABN Amro, the largest Dutch bank.
RBS, which kept the investment-banking and Asian operations, announced 5.9 billion pounds of writedowns last week on U.S. mortgages, credit-related assets and leveraged loans, with about a third coming from ABN Amro.
RBS will eliminate ``notably more'' corporate banking jobs than it originally planned because of the seizure in credit markets, corporate lending head Johnny Cameron said last week.
The bank's global corporate unit includes rates, commodities, currencies and credit as well as corporate lending and loans for leveraged buyouts. The bank may hire in areas such as commodities, foreign exchange and emerging markets, said the people.
To contact the reporter on this story: Ben Livesey in London blivesey@bloomberg.net
Last Updated: April 28, 2008 06:50 EDT |
