Cutting cost further? RBS shuts some Asia units, sacks 70

Hong Kong/Singapore: Royal Bank of Scotland is closing its equity capital market and corporate finance units in South Korea and cash equities businesses in Indonesia, Korea and Singapore affecting 70 people as part of moves to cut the size of its investment bank.

The decision to close some units comes after an agreement with Malaysia’s second-biggest lender CIMB Group Holdings, which is not buying the units, according to an internal memo seen by Reuters and later confirmed by the bank.

[caption id=“attachment_250176” align=“alignleft” width=“380” caption=“An RBS spokeswoman said 70 employees would be impacted by the closure of the units”]  [/caption]

An RBS spokeswoman said 70 employees would be impacted by the closure of the units and that it would work closely with CIMB to conclude the deal for the other Asian units.

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CIMB said earlier this month that it had entered into exclusive talks with RBS to acquire some of its Asia-Pacific cash equities and investment banking businesses.

“However, for commercial reasons, we have agreed with CIMB that the cash equities, ECM and corporate finance businesses in Korea and cash equities in Indonesia and Singapore will not ultimately transfer as part of the sale,” the memo said.

“We have therefore made the decision to initiate steps to wind down these businesses commencing today.”

A significant chunk of RBS’ operations are in Hong Kong, Singapore, Australia and India. It has offices in 11 countries across the region, including China.

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The deal with CIMB came after an auction for the sale of Asian assets of RBS attracted interest from firms including Bank of China Ltdand Japan’s Mizuho Financial Group Inc.

RBS has halved the size of its investment bank as part of a major retreat since its 2008 taxpayer bailout, and has been forced by the British government and lower profitability across the industry to extend the retreat further.

Earlier this year, the bank had said it would exit its cash equities, corporate broking, equity capital markets and mergers and acquisitions businesses.

Reuters