The Royal Bank of Scotland, which is now majority-owned by U.K. taxpayers, plans to drastically scale back activity in structured real estate, leveraged and project finance, and exit lending in these areas entirely, the bank said Thursday.
It couldnt be determined how many individuals there are in these divisions or whether they would be laid off or reassigned. The official news, which market sources had predicted, came in the form of comments to investors within the banks 2008 earnings results.
RBS announced the same day that it will participate in a U.K. government scheme to insure assets worth £325 billion ($466 billion) and improve its lending capacity. Calls to the bank were not returned.
Several higher-ups in the leveraged finance division, including Symon Drake Brockman and Leith Robertson, have recently left the firm, according to The Times of London. Brockman ran RBS credit markets unit, while Robertson was the deputy chief executive officer responsible for the firms global corporate, bank and sponsor clients. Brockman reportedly left to pursue other opportunities, while Robertson retired. Robertson joined RBS in 1993 to launch the firms leveraged finance business. He later helped develop its mezzanine, structured finance and equity finance divisions.
The British government has been pressuring RBS to preserve capital and stave off further losses since bailing out the firm late last year. The number of layoffs around the globe could reach as high as 20,000. The global banking division, the area that could see the most pink slips, includes parts of ABN Amro, which RBS took over in 2007. The redundancies could hit Charter One and Citizens, two U.S. banks RBS owns, the Times reported. RBS has operations in Hong Kong, Singapore, Japan and India.
The "protect-thy-bailouter" policy RBS is being forced to implement is just the beginning for international banks, sources said. Banks around the globe, over the course of this downturn, will cut back their lending to international clients and focus on their own backyards, they said.
We will see a regionalization of lending and a regionalization of M&A, a New York-based banker said. Taking government money to go outside your country is something, if youre a bank, you just cant do.