Investment Banking News

RBS Said to Plan Cutting Footprint to 13 Nations in Revamp

Posted by Anton Murray Consulting on . Posted in Investment Banking News

Brian Fowler and Richard Partington

Royal Bank of Scotland Group Plc will outline plans to reduce the number of countries in which it operates by two-thirds to 13, a person with knowledge of the matter said.

Executives in markets affected will brief regulators and clients after the board meets Wednesday to approve the plan, the person said, asking not to be named before an announcement to staff. As part of the restructuring, code-named Project Brown, Edinburgh-based RBS intends to sell its U.S. loan commitments and related derivatives to Mizuho Financial Group Inc., the person said without elaborating.

Chief Executive Officer Ross McEwan, 57, has been cutting jobs and assets to bolster earnings, while increasing the focus on U.K. consumer banking in a bid to return taxpayer-owned RBS to private ownership. The bank on Thursday may post its seventh consecutive annual loss since the financial crisis, as it writes down the value of its U.S. consumer unit.

Under Project Brown, RBS will retain trading operations in the U.K., the U.S. and Singapore, a sales team in Tokyo and coverage teams in the Netherlands, Germany, France, Italy, Spain, Sweden, Denmark, Finland and Norway, according to the person. The lender plans to sell or wind down its businesses in markets including China, Hong Kong, Indonesia, Malaysia, South Korea, India and Thailand, the person said.

Management Reshuffle

James Abbott, a spokesman at RBS, declined to comment, as did Masako Shiono, a spokeswoman for Mizuho in Tokyo.

The shares fell 1.1 percent to 399.4 pence at 1:22 p.m. in London, below the 407 pence at which the government says it would break even on its 45.5 billion-pound ($70.5 billion) bailout in 2008 and 2009. They are up 1.3 percent this year.

Rory Cullinan, currently head of the RBS Capital Resolution Group — the unit housing assets the bank wants to divest — will outline details of the restructuring plan to employees on Thursday, the person said. In a management reshuffle, he was appointed as head of RBS’s securities division, replacing Donald Workman, said a person familiar on Tuesday.

Mark Bailie, co-CEO of the RBS Capital Resolution Division, reporting to Cullinan, will lead the process of selling or shuttering the businesses RBS is exiting, according to the person. Bailie will meet in Singapore next week with the bank’s country heads from across Asia as part of his expanded duties, according to the person.

Goodwill Writedown

McEwan has been seeking ways to shrink RBS ever since taking over as CEO in 2013. The lender plans to dispose of most of its toxic assets in its bad bank by the end of the year, 12 months earlier than projected, a person familiar said last month. It also firmed up plans to sell or wind down its Asian corporate banking business, according to a separate person.

RBS may report net income of 2.2 billion pounds for 2014, according to the average estimate of 15 analysts surveyed by Bloomberg. However, the bank will have a 4 billion-pound goodwill writedown, a person with knowledge of the matter said on Friday, which isn’t included in the analyst predictions.

RBS will also name Howard Davies, the former head of the U.K.’s now defunct Financial Services Authority, as chairman, the Financial Times reported on Monday.

Bloomberg Business

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