RBS Said to Plan $1.4 Billion Cost Cuts, Split Into Two Units
Originally posted on Bloomberg
Royal Bank of Scotland Group Plc plans to cut costs by more than 1 billion pounds ($1.44 billion), partly by scaling back investment banking, as Chief Executive Officer Stephen Hester tries to rescue the lender, said a person familiar with the situation.
RBS will split itself into two units over the next three to five years, with one entity including the U.K. and other “core” businesses and the second holding operations that aren’t central to the Edinburgh-based lender, said the person who declined to be identified because the planning is confidential.
“This is a very sensible solution and it will lead to a strengthening of the bank,” said Howard Wheeldon, a senior strategist at BGC Partners in London. “We have to remember that there are some very good parts in Royal Bank which need to be able to prosper and thrive.”
The U.K.’s biggest state-controlled bank is also working to put about 200 billion pounds of assets into a government insurance plan designed to protect lenders from potential losses, said the person familiar with the situation.
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