Reports said Thursday that Royal Bank of Scotland Group (RBS, RBS.L) is planning to cut 2,000 jobs in its Investment Banking unit, after a day the bank said its Chief Executive Stephen Hester would step down later this year. Following this, the stock was down about 6 percent in the morning trade, on the London stock exchange.
Hester is resigning after five years of service in the bank, as the lender, in which the U.K. Government has an 81 percent stake, goes ahead with its privatization plan. The bank was rescued by means of a 45 billion British Pounds bailout in 2008, following its ill-timed purchase of Dutch bank ABN Amro.
The job cut is said to be part of the bank's plan to scale back its investment arm. The 20 percent staff reduction in Investment Banking, is expected to be spread worldwide and will come over the next 18 months.
RBS had said in January 2012 that it would 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 would be eliminated by the end of 2013, split between its UK and non-UK locations.
In September 2012, RBS had said it planned to cut over 300 more positions at its investment banking unit. The company also said it planned to eliminate 3,800 jobs by the end of 2013, compared to its previous target of 3,500.
RBS had gone through investigations by U.S. and UK regulators recently, and settled the allegations that its employees manipulated key global benchmark interest rates, including the London Interbank Offered Rate or Libor and the Euro Interbank Offered Rate or Euribor.
In London, RBS shares are currently trading at 306.70 pence, down 18.90 pence or 5.80 percent, on a volume of 19.01 million shares.
RBS ended on Wednesday at $9.84 on the NYSE. In the pre-market, the shares are down 1.52 percent.
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