The Sunday Telegraph has reported that The Royal Bank of Scotland is to reduce the size of its investment bank by as much as £30bn and cut hundreds more jobs as the taxpayer-backed lender attempts to head off growing government pressure to close down the controversial division.
According to the newspaper, RBS directors, including Sir Philip Hampton, the bank's chairman, are understood to have pushed for the cuts in the investment bank despite warnings from senior executives that pressing for even more radical restructuring could undermine the business.
Senior figures in the bank are said to have warned that the changes could be going ahead too quickly.
'There are just huge pressures to accelerate shrinkage – but going too fast has risks', said a senior source told The Sunday Telegraph.
'You have to have the right landing spot for the balance sheet and the business that you are trying to operate'.
In the meantime, The Independent reports that the bank is set to defy a call from ministers to show restraint on pay and hand out as much as £300m in bonuses to its investment bankers.
The payout will be made despite the majority state-owned bank preparing to report a statutory pre-tax loss of around £4.4bn. RBS executives are expected to insist the bonuses are necessary to keep key staff as the Government considers a massive share giveaway to taxpayers.
One City source close to RBS told the newspaper that retaining top talent was vital to get the stock price to a level that means people can make money if the Government pushes through with the idea of a massive share giveaway.
Finally, Bloomberg reports that Royal Bank of Scotland will signal this week it plans to sell a 15% to 25% stake in its Citizens Financial Group Inc. unit, according to a person familiar with the plan.
No deal is imminent and the process will probably take about two years to complete, the person, who asked not to be named because they were not authorized to speak publicly on the matter, said. RBS (RBS) will announce the move when it reports full-year earnings on February 28th.
image: © Jan Krömer