Facing demands from politicians, the Royal Bank of Scotland (RBS) announced that it plans to reduce its investment banking and international operations — a reorganizational move that will lead to a reduction of some 30,000 workers.
The holding company of a global banking and financial services group (which is mostly nationalized) will instead focus more of its attention on “lending to British households and businesses and maintains only a downsized investment banking business to service corporate clients.” (via Reuters)
RBS was rescued by a 45.5 billion pound ($75.80 billion) government bailout during the 2008 financial crisis. Since then, the future of its investment bank and Citizens has been a source of friction between RBS’s management and Britain’s finance ministry.
Finance Minister George Os expected to return fully to private ownership in the next 12 months while RBS is three to five years away.
Analysts are mixed on the news, with some pointing on the course does not set them well toward revenue growth.
Reuters reported that Citi analysts said Friday “RBS had yet to provide a credible business plan on the future direction and strategy.”
“In the near-term we expect it will be extremely difficult for new CEO McEwan to turnaround the profitability of the bank,” they said in a research note.
RBS stock is up 11% from this time last year.