RBS shrinks investment bank by a quarter

 
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For a bank that has shed 30,000 jobs across its worldwide operations over the past couple of years, most of them in the UK, a further 3,500 departures may not seem massive.

But it still represents huge numbers of people leaving the semi-nationalised bank, most of them this year.

And perhaps as significantly, there is a withdrawal by RBS from an entire loss-making business, the trading of shares and advising companies on takeovers.

RBS will still be big in investment banking - and will still pay big bonuses - but will concentrate on trading foreign exchange and bonds, and helping big companies manage their finances and cash.

However, what it calls its Global Banking and Markets division will be broken up into a new purer "markets" business and an "international banking" operation.

Even those residual operations will be shrunk, as the amount that its investment bank borrows and lends will be cut by £120bn, or more than a quarter, over three years.

And RBS will borrow £75bn less on unreliable wholesale markets.

The overall aim is to improve profits and reduce risks. Which matters to most of us, since taxpayers are sitting on losses of £26bn on the £45.5bn they invested in RBS to rescue it (and see my earlier post).

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +9

    Comment number 7.

    @3. John M

    Nice one John.
    Lets shrink all none productive "Service Sector" Jobs.
    Then we can WORK our way out of the next down turn instead of CUTTING our way out. Lets get our hands dirty and start working again.

  • rate this
    +3

    Comment number 6.

    A bankers days work results in more debt, much of which is now proving unsustainable and a large about of jargon, obfuscation and 'complex products' largely designed to cover their tracks.

    Break up the banks and shut down the casino.

  • rate this
    +1

    Comment number 5.

    OK .... Now can we fire the board?

  • rate this
    0

    Comment number 4.

    With all these high paid investment bankers with P45s, will this lead to reduced bonuses ? I suspect not, thus blowing the myth that you need to pay the bonus to keep your top staff. now if your key staff leave there should be a Queue to fill the empty seats. (not a bad position for an employer to be in).

  • rate this
    -9

    Comment number 3.

    If a steel worker puts in a days work, we have some more steel. This improves our world. If a coal miner puts in a days work, we have some more coal.

    If a banker puts in a days "work", we have a slight shrinkage of our economy. Nothing useful is produced but the banker pockets a percentage of every transaction. The world is then poorer.

    They are leeches - sack the lot of them!

  • rate this
    0

    Comment number 2.

    Further evidence RBS is trying to become the Mondeo of banking. The government should take further steps to convert RBS to a truly publicly owed national bank that would operate in the interests of the wider economy, provide an exemplar for competition, governance and customer services as well as setting beacon for state supervision of banking. Time to put customers and employees on the Board

  • rate this
    -9

    Comment number 1.

    So we invested £45.5bn? I thought it was a bailout. What return can we expect on our investment? My understanding is that there is NO return with bailouts, just an extra £1,299.5bn the national debt.

    With German bonds being sold at NEGATIVE interest and our government 'investing' in junk it's time for an alternative monetary systems. Governments issuing money not bonds and full reserve banking.

 

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