Royal Bank of Scotland Group Plc (RBS, RBS.L) is considering splitting its investment bank into two separate divisions, according to media reports on Monday.
The British lender could reportedly announce a shake-up that will split its markets business from its international banking division and pave the way for John Hourican, head of the investment bank, to leave the company. The British government owns a stake of more than 80 percent in the lender.
Hourican is reportedly expected to accept blame for the bank's alleged role in manipulating key global benchmark interest rates, including the Libor. The Libor is the average interest rate that leading banks in London charge when lending to other banks.
The bank's settlement with U.K. and U.S. regulators is expected in the coming weeks, with media reports estimating that the fine could be about 500 million pounds. Another British lender Barclays plc (BCS, BARC.L) said in June 2012 that it will pay 290 million pounds to settle similar allegations.
RBS' settlement will be part of an industry-wide investigation by authorities that several banks, including RBS, sought to manipulate the Libor and the Euro Interbank Offered Rate or Euribor.
The shake-up would involve splitting RBS' markets business from its international banking operation. Currently, the heads of markets and international banking report to Hourican.
Under the new setup, the two divisions could report directly to RBS Chief Executive Officer Stephen Hester. The investment banking arm employs around 16,000 people.
RBS said in January 2012 that it will implement some strategic and organizational changes in its investment banking/wholesale business, as significant new pressures have emerged, particularly in wholesale banking arena. As part of the changes, the company announced that about 3,500 jobs will be eliminated by the end of 2013, split between its UK and non-UK locations.
In September 2012, RBS said it plans to cut over 300 more positions at its investment banking unit. The company also said it plans to eliminate 3,800 jobs by the end of 2013, compared to its previous target of 3,500.
RBS closed Friday's trading at $11.47, up $0.11 or 0.97 percent on a volume of 374,828 shares.
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