RBS to slash investment banking after huge loss

Royal Bank of Scotland will end investment banking in the Middle East and Africa and "significantly" reduce its presence in Asia and the US after a seventh-straight annual loss, the state-rescued lender said today.
RBS, about 80-per cent owned by the British government, said losses after tax totalled 3.47 billion pounds (USD 5.40 billion) last year following a 4.0 billion pound writedown on Citizens, part of its US operations.
The performance was however much better than in 2013 when RBS had posted an annual net loss of almost 9.0 billion pounds. Stripping out the writedown and other items, RBS recorded an operating profit of 3.5 billion pounds for 2014.

Other one-off charges included 2.2 billion pounds of conduct and litigation charges, including 320 million pounds in the fourth quarter relating to the rigging of foreign exchange markets and 400 million pounds of compensation for the mis-selling of an insurance product.
"While... Progress is evident in the operating profit line of the results announced today, we are still posting an attributable loss to our shareholders," chief executive Ross McEwan said in the earnings statement.
"Now the deconsolidation of Citizens is finally within sight, accounting rules require us to write it down to its estimated disposal value," the New Zealander added.

RBS plans to sell all of Citizens after last year listing one-quarter of the US unit on the New York stock market.

McEwan meanwhile unveiled a major restructuring of its investment banking unit.
"We plan to fully exit our Markets businesses in Central and Eastern Europe, the Middle East and Africa, and substantially reduce our presence in Asia Pacific and the US."
He said the action would help to create "a smaller, more focused, but ultimately more valuable bank with the vast majority of its assets in the UK, and for RBS marks the end of the standalone global investment bank model".

In total, the bank's corporate and institutional unit, home to most of its investment banking activities, will slash its countries of operation to 13 from 38 at the end of 2014.