British Land boss to take over troubled bank
Royal Bank of Scotland may cut thousands of jobs as it restructures its global markets and investment banking division.
The move follows the Government's £20 billion capital injection.
RBS has agreed to “a significant downsizing of capital-intensive businesses” within the division, which employs 25,000 people.
Stephen Hester, the British Land boss who is taking over as chief executive from Sir Fred Goodwin said RBS would remain an important international bank.
He said: “Inevitably, there will be a process of change agreed with my colleagues to overhaul the strategic direction. This bank will be materially changing in a number of ways.”
The Government has not explicitly banned RBS from the higher-risk securities business but such trading is considered difficult to justify now that the bank is being financed with taxpayers' money.
In the two-step capital-raising, RBS plans to generate £15 billion by issuing new shares available to existing shareholders but underwritten by the Treasury, which will buy any unwanted shares.
The Treasury will also buy £5 billion of preference shares paying an interest rate of 12 per cent.
Sir Fred Goodwin will step down soon with no payoff. Under his contract, he had been entitled to £1.2 million. This year it is understood that Sir Fred has lost £8.3 million on his RBS shares, which are worth only £1.9 million, according to the DigitalLook.com investment website.
Sir Tom will leave at the annual meeting next April. His successor has yet to be decided.
Johnny Cameron, head of the global markets and investment banking division, is standing down from the board but is continuing to work in the business for now.
RBS still plans to sell its general insurance operations, which include Direct Line and Churchill. The capital injection yesterday prevented the need for a fire sale.
