Sept. 24 (Bloomberg) -- Royal Bank of Scotland Group Plc, Britain’s biggest government-owned lender, said it will cut 300 more jobs at its investment banking unit and is “on track” with its plan to exit businesses.
RBS will eliminate 3,800 jobs at the division by the fourth quarter of next year, compared with an earlier target of 3,500, according to slides based on a presentation delivered by John Hourican, chief of markets and international banking, to analysts today. About 3,000 of the cuts will have completed this year, RBS said.
“Cost cutting is really the only thing that the bank can fully control,” said Sandy Chen, an analyst at Cenkos Securities in London who recommends selling RBS. “In the relative absence of new revenue, you’d probably look to cost cutting.”
Chief Executive Officer Stephen Hester has reduced assets by more than 800 billion pounds ($1.3 trillion), eliminated 36,000 jobs and scaled back RBS’s securities and Irish units since he took over from Fred Goodwin when the bank was rescued in 2008. The bank in January said it would close or sell its unprofitable cash equities, mergers advisory and equity capital markets divisions.
The bank’s control of costs is “ongoing,” said Chris Kyle, chief financial officer of markets and international banking, at the presentation. “We will almost certainly hit this year’s number” in terms of the guidance, he said.
“The third quarter, we’ve seen a little more optimistic outlook than I was looking for,” said Peter Nielsen, CEO for the investment bank’s markets business. “It was a busier August than I’ve seen in a number of years.”
Direct Line, the insurance unit of Edinburgh-based RBS, said this month it will cut almost 900 jobs as part of targeted annual savings of 100 million pounds before its initial public offering in October. RBS said in June it would eliminate 618 branch-based financial advisers as regulators force lenders to charge clients for the service.
RBS officials declined to say where the extra cuts at the investment bank would be made.
The bank in January divided investment banking into markets, which will focus on fixed income, and international banking, to oversee debt financing, risk management and payment services.
RBS fell 1.6 percent to 271.50 pence in London, valuing the bank at 30.8 billion pounds.
-- Editors: Jon Menon, Steve Bailey
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