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Oversized RBS may nix equities division
Source: Bloomberg News |
December 20, 2011, Tuesday
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Print Edition
Print Edition
ROYAL Bank of Scotland Group Plc, Britain's biggest state-owned lender, may close its equities unit as the lender strives to shrink its investment bank, two people familiar with the matter said.
Shutting or selling the division, including United Kingdom stockbroker Hoare Govett, are among the options being considered by the bank's board, though no final decision has been made yet, said the people. An announcement is expected by the time the bank reports full-year earnings at the end of February, the people said. The equities unit employs about 1,000 people.
RBS Chief Executive Officer Stephen Hester, 51, has said the investment bank is unsustainable at its current size because of regulatory change proposed by the UK government-appointed Independent Commission on Banking and because of shifts in investor demand. The unit, which employs about 19,000 people in total, reported a 29 percent revenue drop in the third quarter compared with the year-earlier period.
The ICB proposals, which the government supports, mean banks will no longer be allowed to use their consumer units to provide cheap funding for investment-banking units. An RBS official declined to comment.
Shutting or selling the division, including United Kingdom stockbroker Hoare Govett, are among the options being considered by the bank's board, though no final decision has been made yet, said the people. An announcement is expected by the time the bank reports full-year earnings at the end of February, the people said. The equities unit employs about 1,000 people.
RBS Chief Executive Officer Stephen Hester, 51, has said the investment bank is unsustainable at its current size because of regulatory change proposed by the UK government-appointed Independent Commission on Banking and because of shifts in investor demand. The unit, which employs about 19,000 people in total, reported a 29 percent revenue drop in the third quarter compared with the year-earlier period.
The ICB proposals, which the government supports, mean banks will no longer be allowed to use their consumer units to provide cheap funding for investment-banking units. An RBS official declined to comment.
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