Royal Bank of Scotland may have to deepen cost cuts at its investment bank to boost profitability, said analysts at Citigroup and Jefferies International.
Bloomberg News reports that the corporate and institutional banking division, which houses the securities trading activities, will have to cut annual costs by about $910m to $1.2bn and maintain revenue of $1.98bn to achieve a return on equity of 8% to 10% by 2019, when the bank aims to complete its restructuring program, analysts at Citigroup wrote in a note to clients. RBS will outline plans for the investment bank at an investors’ day in London on Thursday.
'This looks a big ask to us', said the Citigroup analysts led by Andrew Coombs and Ronit Ghose, who have a sell rating on RBS shares. 'We await more detail'.
RBS CEO Ross McEwan, 58, is seeking to return the lender to profit by eliminating thousands of jobs and shrinking the securities unit, which has been plagued by rising costs tied to past misconduct and tougher regulatory requirements.
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