The Royal Bank of Scotland is to cut the size of its investment bank by up to £30bn and set aside a further £1.1bn in compensation for customers missold payment protection insurance and interest rate swaps.
The Sunday Telegraph reports RBS directors including the bank’s chairman Sir Philip Hampton are pushing for the cuts in the investment bank ahead of expected pre-tax losses for 2012 of up to £4bn, which the bank will announce on Thursday.
Jobs across RBS’ investment arm, particularly in roles such as administration and IT support, are likely to be at risk.
The bank is also set to withdraw capital from the investment bank and reallocate it to businesses such as UK retail and commercial banking.
The newspaper cites Treasury and Business Department sources which say it is difficult to see how a bank 82 per cent owned by the taxpayer can continue with a major investment arm.
RBS has already cut its investment bank balance sheet from £500bn in 2008 to £300bn, and cut over 5,000 jobs to 11,000.
Meanwhile Sky News reports RBS will use its full-year results announcement to increase its provision for misselling interest rate swaps by £700m, and will also set aside an additional £400m for missold PPI.
The bank is also said to be gearing up for a £5bn share sale, with executives told to have the business ready to sell shares by the fourth quarter of 2014.
The Sunday Times reports at least 10 per cent of the stock is likely to be sold, in what would be the first return of cash since the Government’s £45bn bailout of RBS at the height of the financial crisis in 2008. It says RBS will also reveal plans for a partial sale of its American bank, Citizens, to shore up capital.